The Cromford® Market Index for all areas & types has managed to claw its way back to 89.6, just under the balanced market zone of 90 to 110.

However the underlying trends are still poor for sellers. The main reason for the slight rise in the CMI from its low point of 86.6 (reached in early December) is the drop in supply caused by sellers taking their homes off the market for the holiday season. The likelihood remains that these homes will be listed as active again soon. It would have been more positive if demand had increased, but it has not. The Cromford® Demand Index is down from 77.1 to 76.6 over the same month. Not down much, but still going in the wrong direction for sellers to be happy.

Another discouraging sign for sellers is that the Contract Ratio for all areas & types has dropped to 27.5. This is definitely in the "cold market" zone and is the lowest reading for the start of a month since March 2009. The contract ratio shows the balance between homes under contract and homes available to buy. It is telling us that we still have too many listings for the current level of demand. For sellers to do well we need either more demand, less supply or both.

Home prices have been remarkably resilient under these circumstances. In particular, the average price per square foot has been quite buoyant. This is due to the relative health of the high-end luxury market. Multi-millionaires have been prospering because of unusually high returns from the stock market where price to earnings ratios are at extremely high levels. Investors in cryptocurrency have reasons to be cheerful too. Ordinary folk, not so much. Pricing for the bulk of the market is flat, as measured by the monthly median sales price. We stand at $450,000 which is where we were in August 2022 and still below the peak of $475,000 reached during the second quarter of 2022.

The real test will come over the next few weeks when we see how supply and demand behave. January normally sees a build up of both, so the key will be to watch carefully to determine which trend is stronger.

Michael Orr Cromford Report