And interestingly, new listings rose in June, when in normal years they peaked in May and dropped in June. TWO, new listings rose in June to 562,000 homes, the second highest June in recent years, behind only June 2019. And this doesn’t bode well for closed sales in June: Back in June, the NAR had reported that “ closed” sales in May also dropped for the 10th month in a row. June was the 10th month in a row of year-over-year declines. These are listings in various stages of the sales process, but before the deal closes. ONE, pending sales in June plunged by 16% year-over-year, after the 12% drop in May, and the 9% drop in April, as potential buyers lost interest in sky-high home prices and holy-moly mortgage rates. There were about 98,000 more homes listed for sale in June than a year ago, according to data from the National Association of Realtors today (data at ): Pent-up supply, plunging sales: it’s just the beginning, but it is happening.Īctive listings jumped in June by 20% from May, and by 19% from a year ago, the second year-over-year increase in a row, after an 8% jump in May, and both were the first year-over-year increases since June 2019. And to get things moving, price reductions are spiking. This is the “shadow inventory” that is now coming on the market, just when mortgage rates have spiked, and sales are plunging.
Then there were other folks like me that pointed out over and over again that people weren’t putting their old homes on the market after they’d bought a new home, and that these people now owned two or three homes and that they were going to ride up the hottest real estate market ever where prices soared 20% or 30% or more per year, and then they’d sell those vacant homes which no one had ever counted as vacant.Īnd because they already lived in a home, they could sell their vacant homes without having to buy another home. By Wolf Richter for WOLF STREET.įor the last two years, the story was that there’s no inventory for sale, that there was a housing shortage, and that’s why prices were skyrocketing. "But, when the economic uncertainty dust settles and rates stabilize, those buyers and sellers who were on the sidelines will jump back in the housing game.Pent-up supply suddenly shows up – those vacant homes that no one was counting as vacant. "There are regional and market variations, but in aggregate sales are slowing, sellers and buyers are backing away, and price deceleration will follow suit," Kushi said.
"August's pending-home sales point to further declines in existing-home sales," First American Deputy Chief Economist Odeta Kushi, told Insider, adding that the slowdown is impacting almost every US housing market. During the same period, existing home sales - a measure of sales volume and prices of existing housing inventory - plunged to the slowest pace since November 2015 as only 4.8 million units were sold.ĭata from the National Association of Realtors shows that pending home sales, the number of sales in which a contract has been signed, fell 2% from July to August, declining 24.2% year over year. In August, nationwide new home sales fell 0.1% year over year to 685,000 units by month's end. With fewer Americans lining up for mortgages, home sales have slowed throughout the US. The Fed started its hiking cycle in March and accelerated through the summer, and its effects on the housing market have been dramatic. The central bank's aim is to cool demand to a point where it's in better balance with supply, which would counter the inflationary pressures seen over the past several months. Rate hikes affect all kinds of borrowing costs, from mortgage rates to credit-card interest. The central bank raised its benchmark interest rate by another 0.75 percentage points on September 21, pushing it to restrictive levels in hopes of easing demand. The latest uptick in rates is fueled in part by the Federal Reserve's extended fight to cool inflation. "The steep increase in rates continued to halt refinance activity and is also impacting purchase applications," MBA's associate vice president of economic and industry forecasting Joel Kan said in MBA's Weekly application survey. The refinance share of mortgage activity slid to 29% of total applications from 30.2%. Higher rates also curbed refinance activity as homeowners stick to the low rates enjoyed earlier in the pandemic. The upswing in rates isn't just affecting loans to buy a new house.
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