Home sales are melting Nationwide to depths of falling housing 1. Prices – 10% in 5 months. Cash buyers and investors are back in a big way

Confrontation between seller and buyer.

By Wolf Richter for WOLF STREET.

Sales of all types of homes, condos and formerly owned condominiums fell 7.7% in November from October, the 10th straight month of declines, to a seasonally adjusted annual sales rate of 4.09 million homes, nearly closing. -down in May 2020. And beyond May 2020, the lowest rate of sales since the depths of the housing crisis was November 1, 2010, according to data from the National Association of Realtors.

On a year-over-year basis, sales fell 35%, the 16th straight month of year-over-year declines. Compared to the last free money peak in October 2020, sales are down 39% (historical data via YCharts):

The above sales numbers are “seasonally adjusted annual rates” of sales, so what would sales be like for the full year at the current rate of sales. Actual sales in November, unadjusted, were 326,000 homes, also down 35% from November 2021 (503,000 homes).

Cash buyers are falling back in a big way. All-cash sales accounted for 26%, or to about 85,000 homes, of the 326,000 total homes sold in November, as measured by actual sales, not the seasonally adjusted annual rate. This was up from 24% in November 2021. But due to the larger number of home sales in November 2021 (503,000 sales), a 24% share of all cash sales was 120,000 all cash sales.

In other words, the actual number of all-cash sales decreased by 35,000 year-over-year, even though the share of all cash sales rose by two percentage points amid the decline in total sales.

Individual investors or second home buyers are also holding back in a big way. They purchased 14% of all homes sold, or about 45,640 homes (effective annual rate, not seasonally adjusted), down about 30,000 homes from November 2021 when they bought 75,450 homes (for a 15% share).

Cash buyers and investors are just like everyone else: They also see what’s going on in this housing market.

Single family homes for sale It was down 7.6% in November from October, and down 35% year-over-year, to a seasonally adjusted annual rate of 3.65 million homes.

Sale of housing units and cooperatives It was down 8.3% in November from October, and down 37% year-over-year, to a seasonally adjusted annual rate of 440,000 units.

Sales fell in all regions, but declined more in the west and south. Month after month and year after year:

  • Northeast: -7.0% illiterate; -28.4% YoY.
  • Midwest: -5.6% um; -30.6% YoY.
  • South: -7.1% um; -35.0% YoY.
  • West: -12.5% ​​um; -45.7% YoY.

Average price Of all home types that closed in October, sales fell for the fifth straight month, to $370,700, down 10.4% from the peak in June. That decline cut the annual gain to just 3.5%, down from an annual gain of 15% a year ago.

Only part of this decline from June to November is seasonal. Over the five years leading up to the pandemic, the average decline in June and November was 5.8%, and the maximum drop in 2015 was 6.9%. This indicates that the current decline of 10.4% exceeds even the maximum seasonal decline. This is also confirmed by the rapidly shrinking price gains year-on-year, now down to just 3.5% (historical data via YCharts):

active lists (Total inventory for sale minus properties with pending sales) was roughly flat compared to the previous month, at 751,500 homes in November, but up 47% from a year ago and the highest since August 2020.

Active listings still relatively low as many potential sellers are calling for a great Fed pivot that will get mortgage rates down to 3% in short order they haven’t put their vacant homes on the market because they still think this too is going through and if the home is offered in Market for a while and it doesn’t get a bite, they’ll pull it off the market, especially over the holiday period (data via realtor.com).

The width of the months in November is unchanged from October, at 3.3 months, and both months are the highest since June 2020.

price cutsIn November, 38% of active listings saw price cuts. While the last six months were lower than the previous ones, all of the past six months saw a higher percentage of price cuts than any of the previous months in data from realtor.com going back to 2016 (data via realtor.com).

Confrontation between seller and buyer: This combination of low sales, low prices, high but still scarce supply, and a very high rate of markdowns when homes finally come on the market, suggests a standoff between would-be sellers, who they think will outpace the Fed’s anti-inflation; And potential buyers who have no desire to overpay, even cash buyers hold back significantly, even though they are not dependent on mortgage rates.

As always, homes that are priced right sell, but ‘right price’ means the price is low where the potential buyers are, there are a lot of them, but they are several floors up. As potential sellers find out about this, their homes will sell.

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