Housing Market Update

This article was posted on November 2, 2022

Housing Market Update 11/2/2022

New Home Sales Report

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly released their New Home Sales report, which measures signed contracts on new homes. This number fell almost 11% in September at a 603,000-unit annualized pace. This came in stronger than estimates that were looking for a 13% decline. Sales for September 2022 were down 17.6% from September of last year. There were 462,000 “new” homes for sale at the end of September, but believe it or not, there were really only 56,000 or 12% are actually completed. At the current pace of sales based on the headline number of available homes, there was a 9.2 months’ supply. when factoring in the amount of actual completed homes, the month’s supply is only a mere 1.1 months. The median home price rose 8% last month to $471,000 after a 6% decline in the previous report. But looking deeper, this giving value all due to the mix of sales. There was a big uptick in sales of homes in the $500,000+ pricing segments.

Closings on Existing Homes

More on the housing market, the National Association of Realtors (NAR) recently released their Existing Home Sales housing report, which makes up around 90% of the housing inventory across the country, showed that closings on “existing” homes were down 1.5% in the month of September. Even though this was slightly stronger than expectations of a negative 1.7% print, it was still a decline. Year-over-year existing home sales were down 23.8% at 4.71units and lower than last year’s sales of 6.18million units back in September of 2021.

Existing Home Inventory

Total inventory of existing homes declined for the second straight month to 1.25 million units by the end of September, it was at 1.28 million in the last report. At 1.25 units this means there is a 3.2 months’ supply at the current sales pace which is very tight. A six-month supply is seen as healthy and balanced. Digging deeper into the supply portion of this report, 41% of the housing inventory were already noted as under contract and actually not available. This means there was only about 732,000 active homes. So, when looking at the month’s supply of active homes that are available for sale. It is only about a 1.9-month supply.

Lawrence Yun, the NAR Chief Economist said, “Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” Yun added. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

It is clear that there is a cooling of home prices, but demand is still there and still very strong. Average amount of days a home sat on the market increased from 16 days to 19 days. Even though they are sitting slightly longer, if they are priced more realistically or more correctly, they are still selling at a fast pace. 70% of homes were on the market for less than 30 days.

When looking at the actual number of truly active available homes, we can see that inventories in new and existing homes are super tight at a combined 788,000 units. Couple that with record high household formations, and this dynamic certainly points to home price resiliency. There are certainly pockets across the country where their numbers are outliers, but overall when homes are priced correctly they are selling very quickly.

Housing Market Update