Every month, Maryland REALTORS®, the state association that serves the real estate industry in Maryland, publishes housing statistics of the previous month’s activity in home sales across the state. This provides a measurement that can be compared to results from previous years and months. The housing data can also be viewed at the county level, to help you get an even better picture of what your local market looks like.
What the measurements mean for you in your housing search can be complicated without knowing the context and significance of things like units pending and active inventory. To help you get a better picture of the housing market you’re in, let’s examine some of the key terms and their measurements. In the monthly infographic, each of these terms looks at the previous calendar month and compares that with the result from that same month last year.
Units Sold and Average Prices (Mean and Median)
Units Sold looks at the number of homes sold (single-family, townhouse, condo, etc.) in a given month.
Average Sales Price is the average price a home sold for that month. The average used in this figure is the mean of home sales price — the overall dollar figure of homes sold, divided by the number of homes sold. You want to be mindful of the average sales price, however. One or two high-dollar (luxury) purchases can skew the average price upward.
Median Sales Price examines the midpoint in sales prices of all homes sold. This shows us the price where half the homes sold were less than this price, and the other half of homes sold were above this price. Because it isn’t affected by outliers, it often provides a clearer picture of what the “typical” home is selling for.
When looking at the Average Sales Price and Median Sales Price, here are a couple of things to keep in mind:
- If the Average Sales Price is significantly higher than the Median Sales Price, it suggests that luxury homes may be skewing the results.
- If the two figures are close, it suggests that market prices are more evenly distributed.
- REALTORS® and market analysts generally look at the Median Sales Price, because it better represents the experience of current buyers and sellers.
Units Pending and New Listings
Units Pending looks at houses “under contract,” something you’ve likely seen on real estate signs in your neighborhood. These homes are in the process of being sold, but the transaction is not yet complete. When looking at the current number and last year’s figure, remember that when it’s greater than the previous year, it suggests that demand is stronger than last year’s. Likewise, if it’s less than the previous year, the demand is softer. Keep in mind, this figure always measures the number of homes, not the dollar value of the contract. It is about the volume of sales happening.
New Listings measures the amount of fresh housing inventory entering the market each month. If there are more new listings than the previous year, buyers have more choices, and inventory may rise if demand doesn’t pick up. If the number of new listings is less than the previous year, it suggests a tightening of the market.
When looking at New Listings and Units Pending together:
- When New Listings and Units Pending rise: it suggests an active market for both buyers and sellers.
- When New Listings rise and Units Pending fall: it suggests a softening of the market, as inventory rises more than demand. This could become a buyer’s market.
- When New Listings fall and Units Pending rise: it suggests a tightening of the market, as inventory falls, but demand stays strong. This could become a seller’s market.
Active Inventory, Months of Inventory, and Days on Market
Active Inventory measures the number of homes currently available for sale. If the current number is greater than the previous year’s number, then it suggests that the market will be competitive for sellers and buyers will have more choices. Likewise, if Active Inventory is less than in the previous year, it suggests that it will be more competitive for buyers, with the same number of people choosing from fewer houses on the market.
Months of Inventory examines how long it would take to sell all the active listings at the current sales pace. For reference, six months of inventory is generally considered a “balanced market.” A lower figure might suggest faster sales and stronger pricing (in favor of sellers); a higher figure might favor the buyer by suggesting slower sales and price reductions.
Days on Market indicates the number of days it takes for an active listing to become “under contract” or sold. When this figure falls, it suggests that demand is stronger, and homes are selling more quickly. When this figure rises, it suggests demand is softening.
Looking at Active Inventory, Months of Inventory, and Days on Market together can help you to grasp where the housing market is heading. If all three measurements are aligned, it’s a strong signal. If these data fields diverge, it generally signals a market in transition between Seller’s, Buyer’s, and Balanced markets.
Types of Markets
The market is always changing, and never quite the same. These housing stats can signal potential market conditions, like if the market is balanced or if it’s more of a buyer or seller market.
Not all of the following conditions need to be met for it to be one of these types of markets, but the following trends can be used with additional information and housing stats to understand the current state of the housing market.
In a Seller’s Market:
- New Listings is falling
- Units Pending is rising
- Active Inventory is low or declining
- Months of Inventory is low or declining
- Days on Market is falling or very short
In a Balanced Market:
- New Listings and Units Pending are rising or falling together
- Active Inventory is steady or slowly rising
- Months of Inventory is moderate and stable
- Days on Market is leveling off
In a Buyer’s Market:
- New Listings is rising
- Units Pending is falling
- Active Inventory is rising
- Months of Inventory is rising
- Days on Market is rising
State figures are great… but what about what’s happening where I live?
That’s an excellent question. The infographic from Maryland REALTORS® looks exclusively at data statewide. If you go to the actual monthly housing statistics, where the infographic data comes from, you will see all these data fields broken down for each county, plus Baltimore City. So, when you’re looking to move to a specific area, you can look at the data at the county level.
When you’re looking to buy or sell a home, keeping track of the housing statistics every month will help you spot trends that could affect your interests and needs. Remember though, trying to time the market can cause you to miss out on other opportunities, from your dream home to low mortgage interest rates. You decide when you are ready to buy or sell, not the market. Of course, with knowledge is comfort—and a way to move forward in your home journey with confidence!
