The Register Citizen (Torrington, CT)
CT real estate market sees gain on this measure — more to come?
In a January surprise, homes under contract to be sold increased across a large portion of Connecticut compared to the start of 2022 — a possible signal of a better-than-expected spring market in the offing despite interest rates that are tacking on extra to the cost of a mortgage.
The Stamford-based brokerage William Pitt Sotheby’s International Realty reported the development on Thursday, while noting completed transactions were down 36 percent from their January 2022 totals in much of Connecticut. William Pitt Sotheby’s does not include rural Tolland and Windham counties in its monthly analysis.
Adding together both closed sales and homes under contract, the Connecticut totals were off just 8 percent from January 2022 across both measures — showing demand is still strong among buyers picking through a historically low number of homes available for sale in advance of the spring market.
For buyers, the cadence of new listings hitting the market is critical, providing more options both for them and possible rival bidders who might be zeroing in on the same properties. That is a particular consideration for those purchasing a home for the first time who are being pinched by escalating rent, and who do not have the asset of an existing house they can sell to recoup the costs of a new residence.
New listings were down 15 percent in January from a year earlier in the six counties covered by William Pitt Sotheby’s, working out to an average of about 55 daily for the month. Over the first few days of February into Friday morning, however, new listings were hitting the Connecticut market at a pace of more than 200 properties daily as
tracked by Zillow, an escalated rate even from the final days of January.
That number will rise with the approach of spring, as homeowners prepping for a move prepare residences to be shown to prospective buyers.
Only a small percentage of newly listed homes since last December are brand new — a possible remedy for Connecticut’s tight housing market, but with builders having faced escalated costs last year to complete projects that are hitting the market this spring.
Home sales are a key input for the larger Connecticut economy, generating economic activity as buyers spend on furniture, renovations and other needs for their new abodes. Real estate also serves as a yardstick for consumer finances, and provides a signal on whether Connecticut is generating jobs at incomes that allow first-time buyers to purchase homes, and whether they are choosing Connecticut over New York, Massachusetts or Rhode Island if their day employment scenario allows that choice.
“Notably, this uptick in contracts is only happening in Connecticut so far,” stated William Pitt Sotheby’s in its January review. “We are still witnessing elevated buyer demand, particularly out of New York City, but reduced inventory remains a major factor limiting sales.”
On Friday, the Bureau of Labor Statistics reported an estimated net gain of 517,000 jobs in the U.S. economy in January, with unemployment holding steady at 3.4 percent of the available work force actively searching for jobs. Initial claims for unemployment continued to drop in Connecticut the final week of January, with less than 3,100 applications filed compared to nearly 4,500 the prior week.
Michael Barbaro, president of the SmartMLS multiple listing service in Wallingford that coordinates listing data across most of Connecticut, said any slowing of the U.S. economy could give some buyers pause in the early weeks of 2023, on the chance overall demand might dim and prompt some sellers to drop their prices. Many sellers did just that in the back half of 2022 after trying to score a sale at the higher price points buyers were paying in the early stretch of the COVID-19 pandemic.
“They do have a little bit more concern and they are proceeding with caution,” Barbaro said. “The fact that we have a solidly and quite frankly ridiculously low inventory is probably the largest mitigating factor.”