Home sales plunge nationally to the depths of the housing bust 1. Prices – -10% in 5 months. Cash buyers, investors pull out in a big way

Seller-buyer standoff.

By wolf richter for wolf street,

Sales of all types of previously owned homes, condos and co-ops fell 7.7% in October to November, the 10th month of decline, a seasonally adjusted annual rate of 4.09 million home sales, roughly matching the lockdown Less in May 2020. And after the May 2020 housing bust, it was the lowest rate of sales since November 1, 2010. according For data from the National Association of Realtors.

Year-over-year, sales declined 35%, the 16th month in a row of year-over-year declines. Compared to the recent free-money peak in October 2020, sales were down 39% (historical data YCharts,

The above sales figures are “seasonally adjusted annual rates” of sales, so that’s how sales would be for the full year at the current rate of sales. Actual sales in November, not adjusted, came in at 326,000 homes, down 35% from November 2021 (503,000 homes).

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

In other words, the actual number of all-cash sales declined by 35,000 year-over-year, although the share of all-cash sales increased 2 percentage points amid the decline in total sales.

Individual investors or second home buyers are also pulling out in a big way. They bought 14% of all homes sold, or about 45,640 homes (real, not seasonally adjusted annual rate), 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 look to see what’s going on in this housing market.

sales of single family homes Homes fell at a seasonally-adjusted annual rate of 3.65 million homes in October to November, down 7.6% and 35% year-on-year.

Sales of condos and co-ops Sales fell 8.3% in October to November and 37% year-on-year to a seasonally adjusted annual rate of 440,000 units.

Sales fell in all regions, but fell most in the west and south. Month-to-Month and Year-to-Year:

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

Average price Home sales of all types closed in October, falling for the fifth consecutive month to $370,700, down 10.4% from June’s high. The decline reduced year-to-date gains to just 3.5%, down from a year-ago gain of 15% the year before.

Only part of this June-November decline is seasonal. In the five years before the pandemic, the average June–November decline was 5.8%, with the maximum decline in 2015 being 6.9%. This suggests that the current 10.4% decline is much higher than the maximum seasonal decline. This is also confirmed by the rapidly shrinking year-on-year price gains, which are now down to just 3.5% (historical data via YCharts):

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

Active listings remain relatively low because many potential sellers are praying for a spectacular Fed pivot that will drop mortgage rates to 3% in no time, and they haven’t put their vacant homes on the market because they’re still They are thinking that they will pass; And if the house has been on the market for a while and hasn’t been chewed over, they’ll take it off the market, especially during the holiday period (via Data) realtor.com,

Months supply in November was unchanged from October at 3.3 months, the highest for both months since June 2020.

cut prices: In November, 38% of active listings had a price reduction. While down from previous months, the last six months from realtor.com’s data up to 2016 had a higher proportion of price cuts than the previous months (via Data) realtor.com,

Seller-Buyer Standoff: Falling sales, declining prices, increasing but still tight supply, and a very high proportion of price reductions when homes finally appear on the market indicate that there is an impasse among potential sellers who think that They’re Going to Outweigh the Fed’s Inflation Fight; And potential buyers who have zero appetite to pay more, even cash buyers, are pulling back in a big way, even though they aren’t dependent on mortgage rates.

As always, homes that are priced right are selling well, but “priced right” means that the price is low where there are potential buyers, and there are lots of them, but they are many floors and are below. And as potential sellers figure it out, their homes are about to be sold.

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