Sacramento Market Update 1.18.2023

Last week's CPI (Consumer Price Index) came in at  estimates, showing another consecutive decline in the inflation numbers with more room to go.  Shelter inflation (rent payments and owner equivalent rents are measured) which accounts for 32.77% of the CPI is usually the slowest mover and laggard of all the other baskets.  Rent numbers have shown signs of cooling nationally, so it would be fair to expect inflation numbers to continue easing.  Rents and home prices do not move in tandem. If mortgage rates break 6% as we expect, buyer demand should come back and depending on supply at the time could help home prices rise a bit.  Just because home prices come back up does not mean that rents have to come up as well.  It's not a 1 to 1 movement. 
Let's take a look locally.  Home prices have come down to accommodate the lack of buyers.  Homes that are mispriced at their original list price are closing lower and sellers are often giving buyer incentives to close the deal across the board.  Active listings are down 19% MoM, which is further shown in the months of inventory at 1.8 months, down from 2.3 in November.  Funny enough we are still technically considered to be in a seller's market very simply due to the available homes for sale being so low.
The article of the week is backing up exactly what I've been saying for at least eight weeks now.  A break lower of 6% mortgage rates could set us up for an active Spring locally.  Are you looking to take advantage?

What are you seeing or hearing? I'd love to know paul@guiderealestate.com