1. Sales are down from last year’s all-time highs, but still relatively strong.
  2. Pending sales are also down significantly from last year’s torrid market.
  3. Prices continue to hit all-time highs, but will likely slow down for the rest of the year.
  4. New listings continue to struggle, but inventory is stabilizing.
  5. Homes are still selling more quickly and for a better price than every before.

So is the party over? After two years of relentlessly surging sales and prices, has the seller’s
market in the New York northern suburbs of Westchester, Fairfield, and the Hudson Valley
finally fizzled out? Should we start preparing for a buyer’s market, with falling sales, prices, and
a shift of power to purchasers?

The answer is “no, not quite yet.” Yes, we’re seeing clear signs that the historically strong
seller’s market that emerged after the pandemic lockdown in the middle of 2020 has cooled off.
Second-quarter home sales were down from last year, falling 15% across the entire northern
suburbs and down almost 8% in Westchester, 13% in the Hudson Valley, and 23% in Fairfield.
(We saw an increase only in the Bronx, an urban market that did not have the same torrid
activity over the past two years.) Moreover, pending business, which is the number of deals
that were put into contract during the quarter, similarly fell about 12% regionally from last
year. Those numbers tell a clear story of a seller’s market cooling, chilled by a surge in interest
rates and increasingly skeptical buyers scared off by what two years of double-digit
appreciation has done to pricing in the region.

But as we’ve said before, “cooling” does not mean ‘”cold.” The seller’s market might be fading,
but that doesn’t mean we’re going to see an immediate shift to a buyer’s market. Indeed, we
see several signs that the market might just be returning to a more normal, balanced state
following an abnormally large two-year tidal wave of activity following the end of the lockdown
restrictions, a surge in pandemic-driven urban-to-suburban migration, and the desire to lock in
what were at the time historically-low interest rates.

Accordingly, we expect a softer transition to a more “normal and balanced” market rather than
a severe correction to a buyer’s market? For one thing, we believe it’s a little misleading to
compare this year’s market to the high-water mark of last year, which was the strongest seller’s
market in the history of the region. Yes, the market is down from last year, but we could not
have expected last year’s torrid pace to continue.

For a better comparison, we reached back to the second quarter of 2019, which we’re calling a
“control quarter” because it represents the kind of “normal and balanced” market we believe
that we’re entering, before all the distortions of that post-lockdown tidal wave of activity. And
if you compare the current market to 2019, you can see that it’s performing relatively well.

Compared to the second quarter of 2019, regional closed sales are up almost
5% and pending sales are up almost 4%. The story is a little more muddled in individual
markets, but the general sense is that the market is up slightly from that “normal and balanced”
market of 2019. And at the time, we thought that the housing market was pretty strong – not
as torrid as the 2020-21 activity, but we were seeing sales and price increases at a modest but
measurable pace.

Another reason why we don’t think the market is going to enter a corrective buyer’s market
anytime soon is that prices are still appreciating at a tremendous rate. That rate is slowing a
little from 2020 and 2021, but it’s still well above traditional averages. Why? Because even
with interest rates up, inventory is falling, so we still have too many buyers chasing too few
houses. Basic economics: if demand is steady, and supply is falling, prices go up.
As you can see from the table below, prices were up sharply throughout the region, rising
almost 12% regionally in the northern suburbs. Moreover, they are now up over 46% regionally
since the 2019 period right before the surge in the seller’s market.

The bottom line is this: the market is cooling slowing from the torrid pace of last year, but that
doesn’t mean it’s cold. From a historical perspective, we’re seeing sales at a higher rate than at
any time prior to 2020, and we’re seeing prices at an all-time high. That’s a pretty strong

Going forward, we expect that the regional housing market will continue to track near-2019
levels, as we transition to that more normal and balanced market. Sales will continue to stay
well below last year’s levels, but probably close to 2019. As for prices, we believe that we
won’t see double-digit price appreciation again this year, but expect that low inventory will
continue to drive meaningful price increases through the rest of the year and into 2023.