At Parcl Labs, we've developed an algorithmic approach to identify potential housing market stress, leveraging our API to analyze real-time market data. Our open-source methodology focuses on two critical indicators: supply-demand imbalances and price cut activity.
Here’s what we found in our latest algorithm driven analysis.
1️⃣ Algorithm Flags Fewest Markets Since Series Inception
Our latest analysis identified seven markets that met our criteria of outsized YoY supply-demand gaps and above-national-average price cuts: Dallas, Orlando, Lakeland, Knoxville, Tulsa, Albuquerque, and newcomer Greenville. This list represents the lowest count since we began our analysis in June 2024, with six markets carrying over from last month.
2️⃣ Supply-Demand Dynamics Show Notable Tightening
The national supply-demand gap has narrowed considerably to 33.8%, down from 40.3% last month. This shift reflects:
📈 For-sale inventory: Up 21.3% YoY
📉 Sales activity: Down 12.5% YoY
👀 Markets with >50% gap: Only 15 of the top 100 US MSAs (compared to 39 in September)
This reduction in markets showing severe imbalances indicates many stressed areas are shifting to find new equilibrium points - often at adjusted (lower) price levels.
3️⃣ Regional Market Evolution: Florida & Texas
An interesting narrative is emerging in Florida and Texas - while most major metros show modest improvement in monthly supply-demand balance, three markets maintain concerning stress levels in our algorithm:
Dallas, Texas:
58.3% supply-demand gap
30.8% increase in supply
27.5% decrease in demand
Orlando, Florida:
50.5% supply-demand gap
38.8% increase in supply
11.8% decrease in demand
Lakeland, Florida:
50.7% supply-demand gap
35.4% increase in supply
15.4% decrease in demand
The persistence of these imbalances, even as neighboring markets start to adjust, suggests these areas are set up for more volatility and price pressure. Recent hurricane activity in Florida has not yet created any extreme impact on supply dynamics in affected markets.
4️⃣ Price Cut Activity: Early Seasonal Acceleration
The national price cut rate has increased to 38.0% of for-sale inventory, up from 36.9% in October. Key observations:
46 markets now exceed the national average (up from 45)
Florida markets show highest absolute levels among flagged markets
Orlando: 44.6% (down slightly from 45.4%)
Lakeland: 44.1% (down from 45.2%)
While price cuts typically increase heading into winter, this year's earlier onset and higher YoY levels suggest increased seller motivation across markets.
🔗 Access our complete methodology, code, and market report in the comments.
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