by Wolf Richter, Wolf Street:
Priced right, any home will sell. But sellers are not wanting to price their homes right.
This is getting relentless: Sales of previously owned houses, condos, and co-ops fell by 1.5% in December from November, the 11th month in a row of month-to-month declines, and by 34% year-over-year, to a seasonally adjusted annual rate of sales of 4.02 million homes, roughly matching the lockdown-low in May 2020, and beyond that the lowest since the depth of Housing Bust 1 in 2010, according to the National Association of Realtors today.
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Priced right, just about any home will sell, but sellers are not wanting to price their homes right. And potential sellers are sitting on their vacant homes, hoping for a quick end to this downturn, or they’re putting it on the rental market or try to make a go of it as a vacation rental, rather than dealing with the reality of a mind-blowing housing bubble that has loudly popped (historic data via YCharts):
Actual sales in December – not the “seasonally adjusted annual rate” of sales – fell 36.3% year-over-year, to 326,000 homes (from 513,000 homes a year ago), according to the NAR.
The median price of all types of homes whose sales closed in November fell for the sixth month in a row, to $366,900, down 11.3% from the peak in June. This drop whittled down the year-over-year gain to just 2.3%, from a year-over-year gain of 16% in the spring of 2022.
Only a portion of this June-December price drop is seasonal: The average June-December decline over the six years before the pandemic was 5.8%, with a maximum decline of 6.4% and a minimum decline of 3.8%. This shows that the current 11.3% decline goes well beyond even the maximum seasonal decline.
Additional confirmation that much of this decline was not seasonal is provided by the rapidly shrinking year-over-year price gain, down to just 2.3%, from 16% in December 2021 through the spring of 2022 (historic data via YCharts):
In some markets, the median price has plunged a lot further. For example, in the San Francisco Bay Area, the median price has plunged by 30% from the peak in April 2022, and by 10% year-over-year, according to the California Association of Realtors. But other markets are lagging behind, to produce the overall national average.
All-cash buyers, investors, and second home buyers pulled back massively. All-cash sales plunged by 22% year-over-year, to 92,000 homes (28% of the 328,000 homes sold), down from 118,000 in December 2021 (23% of 513,000 homes sold). In other words, buyers that pay cash didn’t want to buy these overpriced homes either, though they didn’t have to worry about getting a high-rate mortgage.
Sales to individual investors or second home buyers plunged by 27% to 52,500 homes (16% of 328,000 homes sold), from 71,800 in December 2021 (14% of 513,000 homes sold). They too pulled back from this market.
Sales of single-family houses fell by 1.1% in December from November, and by 33.5% year-over-year, to a seasonally adjusted annual rate of 3.64 million houses.
Sales of condos and co-ops fell by 4.5% in December from November, and by 38.2% year-over-year, to a seasonally adjusted annual rate of 420,000 units.
