The supply of Pent-ups suddenly appeared – empty houses that no one counted were vacant.
Via Wolf Richter Because WOLF SUGAR.
For the past two years, the story has been that there is no inventory for sale, a lack of housing, and that’s why prices have skyrocketed. Then there are others like me who have pointed out time and time again that people don’t sell their old homes on the market after they buy a new home, and these people now own two or three. homes and they’re going to drive the hottest real estate market ever, where prices skyrocket 20% or 30% or more every year, and then they’re going to sell empty homes that have never been counted as blank.
And because they’re already in a home, they can sell their vacant homes without having to buy another. This is the “shadow inventory” currently on the market, just as mortgage rates spike and sales are slumping. And to get things moving, the price drop is skyrocketing.
Supply spikes, sales drop: that’s just the beginning, but it’s happening.
The activity list has skyrocketed in June up 20% from May and up 19% from a year ago, the second consecutive year-on-year increase, after an 8% increase in May, and both were the first increases in the year as of June 2019. There are about 98,000 than homes listed for sale in June more than a year ago, according to data from the National Association of Realtors today (data at realtor.com):
The active list grew for two reasons:
ONE, pending sales in June are down 16% y/y, following a 12% drop in May and a 9% drop in April, as potential buyers lost interest in sky-high home prices and sky-high mortgage rates. These are listings during different stages of the sales process, but before the deal closes. June is the 10th consecutive month of decline compared to the same period last year. In June, NAR reported that “May closing sales also fell for the 10th consecutive month. And this doesn’t bode well for sales that closed in June:
TWO, new listings rose in June to 562,000 homes, the second highest in June in recent years, just behind June 2019. And interestingly the new listings. increase in june, when in normal years they peak in May and drop in June. I went around Junes before (data via realtor.com).
Sudden spike in price 50% off in June from May and about double year after year, as sellers trying to attract buyers show up and look as the number of visitors has dropped and the bidding wars have receded into indelible memories. This is an abrupt reset. But more and more sellers grasp a new reality: Prices should match where the buyer is and where the buyer is, but they are much lower (data via realtor.com):
Mortgage interest rate Holy-moly – so called because that’s what people utter when they first see the mortgage payment on a home they want to buy – is hovering around 6% for a fixed-rate mortgage in 30 years, almost double what they were in 2020 (data via realtor.com).
This type of mortgage interest rate, which has doubled since not long ago, and home prices spiked by 40% or more in the same two-year period make for a toxic mix. Something has to be given away, and the buyer won’t – because they can’t, they box it – but the seller. Or no deal.
And the buyers maybe buy, the notorious cash buyers, they do not want bought at that price, now the frenzy is hissing out of the market. No one wants to overpay at the crazy peak of a completely insane market.
Huge difference in listings among the 50 largest cities.
Of the 50 largest cities, the biggest spike in June active listings was in Austin (+144% y/y), Phoenix (+113%), and Raleigh (112%). In the other 31 major cities, active listings grew by double digits. And active listings are down in only a handful of municipalities, led by Chicago (-13%), Virginia Beach (-14%) and Miami (-16%).
Table sorted by annual percentage change of active listings (data via realtor.com):
|Largest Cities, Active List, June 2022||% Change by year|
|Austin-Round Rock, TX||144%|
|Salt Lake City, UT||98%|
|Nashville-Davidson – Murfreesboro – Franklin, TN||eighty six%|
|Riverside-San Bernardino-Ontario, CA||72%|
|Sacramento – Roseville – Arden-Arcade, CA||65%|
|Dallas-Fort Worth-Arlington, TX||62%|
|Tampa-St. Petersburg-Clearwater, FL||56%|
|San Antonio-New Braunfels, TX||54%|
|San Francisco-Oakland-Hayward, CA||forty six%|
|Las Vegas-Henderson-Paradise, NV||45%|
|Oklahoma City, OK||37%|
|San Jose-Sunnyvale-Santa Clara, CA||34%|
|Orlando-Kissimmee-Sanford, FL||thirty first%|
|Portland-Vancouver-Hillsboro, OR-WA||thirty first%|
|Kansas City, MO||28%|
|San Diego-Carlsbad, CA||25%|
|Atlanta-Sandy Springs-Roswell, GA||23%|
|Louisville / Jefferson County, KY-IN||22%|
|Los Angeles-Long Beach-Anaheim, CA||20%|
|New Orleans-Metairie, LA||16%|
|Buffalo-Cheektowaga Falls-Niagara, NY||13%|
|Houston-The Woodlands-Sugar Land, TX||ten%|
|St. Louis, MO-IL||5%|
|New York City-Newark-Jersey, NY-NJ-PA||0%|
|Minneapolis-St. Paul-Bloomington, MN-WI||0%|
|Milwaukee-Waukesha-West Allis, WI||-4%|
|Virginia Beach-Norfolk-Newport News, VA-NC||-14%|
|Miami Beach-Fort Lauderdale-West Palm, FL||-16%|
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