After a 50% price explosion during the pandemic, prices are too high and demand destruction.
Wolf Richter on Wolf Street.
Demand in the resale market continues to be crushed with every small sign of green shoots. Sales of existing detached homes, townhouses, condominiums and cooperatives that closed in January have fallen 4.9% from December, seasonally adjusted December, according to the National Association of Realtors today.
This sales rate rose just 2.0% from the terrible low level a year ago. Overall 2024 was the worst year of sale since 1995.
Compared to January 2021, sales rate fell 36% compared to January 2019, but sales rate fell 25% (YCHARTS historical data):
Rather than 240,000 in January, it was not seasonally adjusted, but actual sales increased 2.6% from the terrible low level a year ago, down 31% from January 2022. The Blue Line connects January.
They demand destruction by region.
The chart below shows seasonally adjusted annual rates (SAARs) across four US census regions. Maps of the four regions can be found in the comments below the article.
Northeast US: Seasonally adjusted annual sales rate dropped to 500,000 homes:
Midwest US: Seasonally adjusted annual sales remained at 1,000,000 households.
Southern United States: Seasonally adjusted annual rates have dropped to 1,830,000 homes.
US West: Seasonally adjusted annual sales rate increased by 750,000:
The highest supply since January 2019.
Supply of unsold existing homes in the market is the highest since January 2019 (3.8 months), higher than January 2018 (3.4 months), jumping to the same 3.5 months as January 2017 I did. January 2025 is shown as Red Square.
Since 2021, our active list has doubled.
Active List – From total inventory of sales minus homes with sales pending, rising to 829,400 (red squares on the chart below), the highest in January since 2020, according to data from Realtor.com I did.
The active list has more than doubled since January 2022, but actual sales in January have increased by 31% since January 2022.
The number of days on the market will be longer up to 73 days.
According to Realtor.com, the median number of days a house was sold or withdrawn was sold from the market because it rose from January to January 69th, and as it was not sold in January for 73 days, the median number of days the house was sold or withdrawn from the market It was pulled out. .
Days in the market track the combination of two factors. Before you pull it, it’s about how motivated the seller is to put his home in the market when it doesn’t sell right away, and how quickly the homes he sells.
Here we diverge about the metric, “median price.”
To get a national median, NAR essentially places all houses sold in the US on a sorted list by price and gets the price of one home in the center of that list ( = median price).
Median prices are heavily skewed by changes in the mix of homes sold. In the spring, nationally, higher luxury homes are on the market and the mix of what is sold changes, with a higher median price. It then reverses in autumn and winter, lowering the median price. These seasonal price declines are at least in part due to this change in the mix. In individual markets, the median price jumps up and down each month, mainly based on a combination of what was sold.
Median home prices are the second worst measure of home prices, following “average home prices” (total of all home prices divided by the number of homes). Today, much better methods are available based on vast amounts of data from all sources, including public records with sales pair relationships.
I use one of these large datasets that are not based on median price to visually portray the 33 largest and most expensive markets. Prices have been falling sharply since peaking in 2022, and prices in my series continue to rise, America’s most amazing housing bubble, January 2025: Prices falling at 33, the largest housing market, profits rises.
These 33 big metros are booked by New York Metro, which has the biggest drop from the peak (-23% since June 2022) and the biggest profit from the previous year (+6.0% previous year).
But NAR has been pulling out the national median price for decades.
Single-family homes: In January, the national median dropped from the median downward price in December to $402,000 along the seasonal sequence. This reduced the year-on-year increase to +5.0% in January, down from +5.9% in December (initially +6.1%) to 5.0%.
Based on pre-pandemic seasonality, the median price in January drops sharply, with January or February showing a low seasonal point. High Point is in June.
A 50% price explosion between June 2019 and June 2022 has led to the Fed’s interest control and monetary printing scheme, which has led to the number one problem in the housing market, along with a massive price rise over the past decade. was promoted by. This is why demand has plummeted today. The price is too high.
Condos and cooperatives. Prices fell 2.9% from December to January, with the largest December to January drop since 2015 to $349,500. This decline is well beyond the typical seasonal decline in January, cutting to 2.9% year-on-year in January, down from 4.5% in December.
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