Too-high prices trigger demand destruction, market freezes.
By Wolf Richter for WOLF STREET.
Sales of existing homes – single-family houses, townhouses, condos, and co-ops – that closed in February fell by 5.2% from the abysmally low levels a year ago to 257,000 deals, not seasonally adjusted, down by 27% from February 2022 when home sales began their free-fall after prices had spiked to ridiculous levels, thereby crushing demand.
The blue lines connect the Februarys.
The seasonally adjusted annual rate of sales of existing homes, on a month-to-month basis, ticked up to a rate of 4.26 million, the worst February since February 2009.
From the Februarys in prior years (historical data from YCharts):
- 2024: -1.2%
- 2023: -6.0%
- 2022: -28.2%
- 2019: -20.8%
- 2018: -24.1%
Demand destruction by region.
The charts below show the seasonally adjusted annual rate of sales (SAAR) in the four Census Regions of the US. A map of the four regions is in the comments below the article.
In the South, the seasonally adjusted annual rate of sales rose to 1.91 million homes, the worst February since 2011. From Februarys in:
| 2024 | -4.0% |
| 2023 | -8.2% |
| 2022 | -28.7% |
| 2019 | -18.0% |
| 2018 | -15.9% |
In the Midwest, the seasonally adjusted annual rate of sales remained at 1.0 million homes. From Februarys in:
| 2024 | +1.0% |
| 2023 | -6.5% |
| 2022 | -25.4% |
| 2019 | -16.0% |
| 2018 | -24.8% |
In the West, the seasonally adjusted annual rate of sales rose to 850,000. From Februarys in:
| 2024 | 0.0% |
| 2023 | -1.2% |
| 2022 | -29.2% |
| 2019 | -24.8% |
| 2018 | -26.7% |
In the Northeast, the seasonally adjusted annual rate of sales fell to 500,000 homes. From Februarys in:
| 2024 | +4.2% |
| 2023 | -3.8% |
| 2022 | -28.6% |
| 2019 | -26.5% |
| 2018 | -29.6% |
Highest supply for February since 2019, higher than 2018.
Inventory of homes listed for sale rose by 60,000 in February, to 1.24 million, and was up by 17% from a year ago.
At these inventories, supply of unsold homes on the market remained at 3.5 months in February, the highest February supply since 2019 (3.6 months), higher than February 2018 (3.4 months). The months of 2025 are shown as the red squares.
Days on the market.
The median number of days before the home is either sold or pulled off the market because it failed to sell, at 66 days, was the highest for any February since 2020, and up from 61 days a year ago, according to Realtor.com.
Days on the market show the mix of two factors: How motivated sellers are by letting their homes sit on the market when it doesn’t sell right away before they pull it, and how quickly homes sell that do sell.
Median price for single-family houses and condos.
The median price is heavily skewed by changes in the mix of homes that sold. In the spring, nationally, more higher-end homes come on the market and sell, which changes the mix of what sold and skews the median price higher. It then does the reverse in the fall and winter and skews the median price lower. These seasonal ups and downs in prices are at least in part due to this shift in the mix.
Single-family houses: The national median price rose to $402,500 in February, from the downwardly revised January of $398,100 that had originally been reported as $402,000.
This trimmed down the year-over-year increase to +3.7%, and the January gain was downwardly revised to +4.0% (from +5.0% originally reported). December’s gain of +5.9% had originally been reported as +6.1%.
The 50% price explosion over the three years between June 2019 and June 2022, on top of the large price gains in the prior 10 years, was driven by the Fed’s interest-rate repression and money-printing schemes which have created the #1 problem in the housing market today, which is why demand has plunged: Prices are way too high.
Condos and co-ops. Prices rose to $355,100 and were up by 3.5% year-over-year.
But every market dances to its own drummer. I track home prices in the largest most expensive 33 markets, in my long-running series The Most Splendid Housing Bubbles in America, Feb 2025: The Price Drops & Gains of 33 Largest Costliest Housing Markets. In quite a few of them, prices have dropped substantially from their peaks in mid-2022. Here are two examples:
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To illustrate the four Census Regions of the US of A:
Anyway we can get Maryland and Delaware added to the Northeast region? I feel like they are closely associated with the metros of the north and have nothing in common with the South.
Can we get everything in Texas from Dallas on west added to the West, please? And extend that line north: Can we get everything in Oklahoma from Tulsa on west added to the West please?
The divisions between those four regions are not always totally intuitive. But you gotta draw the line somewhere.
It is embarrassing being technically in the South. Even more so when PA gets to be in the North.
There are strong historical reasons for why the South is defined as it is. All of the states in the South (except Oklahoma which was still a territory) have a common legacy.
That Austin peak to where they are at now sure do like kind of a like a middle finger…interesting..
lol sure does !
In my area, all of the realtors will tell you the market is booming! Meanwhile the supply of luxury homes is at 18-24 months.
Same in SoCal. Feels like in OC and certain desirable part of LA, that 2021/2022 narrative even among non RE agents never left..
Technically speaking it looks like a classic “head and shoulders” pattern.
Meaning, the “expected” decline is about the size of the head. Eyeballing about a range of $480k, going to $580k, therefore declining to (at least?) $380k median.
Technical analysis is just recognizing the repeated patterns of human behavior. The asset/ market is agnostic to the psychology.
To my old eyes that Median Price of existing SFH just needs a couple more flat sawtooths then it’s back on the prepandemic trend. Right now maybe it’s 10-15% too high. But not 50%. People can wait and rent for two or three thousand a month and try to catch the absolute bottom in the next couple of years I suppose.
Voice of reason.
I am not paying $400K for a house that should cost $250K. I do not care about interest rates.
And I, in the boondocks, will not pay $250K for a house that should cost $150K. It is people like us that will drive down home prices.
You’d think so, wouldn’t you?
I’d be thrilled to find a buildable lot in a desirable area for $250k
We just had one a few years ago go for $275. It was small, though, and the house they ended up putting there was so small and with barely any windows. I think they were planning something bigger and better, but then realized how insane labor costs had become after QE2. It’s like they had grand plans, but ended up paying significantly more for what amounted to basically a spec house (but in a decent, existing area, at least).
PghExpat, its unfortunate for those waiting for the price to drop since 2012 just to see it increase year after year. This kind of thinking never lets you jump in and ride the appreciation wave. When a house was $250k people with this train of thought believed it should be $150k, and now that its $400k think it should be $250k, and when it gets to $1000k they will think it should be $600k and so forth and they will never buy a home and enjoy the appreciation. You definitely do not want to buy at a peak, but you also have to look at the big picture to see if it makes sense, otherwise you will never see an opportunity when its right in front of you.
We’re experiencing a boom in the purchase of condos here in Washington D.C. All the WFH government workers have now been forced back into their downtown offices in the Swamp. Traffic is horrendous. They now have 2 and 3 hour commutes both ways from their country homes. In order to mitigate the effects of the long commute, they now are buying low cost condos in the city to be closer to work and moving out of their rental homes in the far out countryside. The days of their phony WFH government job and second or third job at the same time on multiple laptops on their kitchen table, sucking off the taxpayer and then some, are over. It was easy to detect this abuse, as these people had multiple IP addresses eminating from the same physical address in the countryside. Musk found this out and reported this abuse to the DOGE working group. This will be reported soon as a nation scandal.
Yeah, I’ll be holding my breath for that one.
Amen, and a sprinkle of water will cure those intolerable Federal workers! Sorry for not capitalizing all the words
Anybody that believes Musk has my sympathy.
Yet people believe that 4 million federal employees were all working hard from home and couldn’t go back to the office in 2025 due to covid
2.4 million.
I think he is a pretty transparent straight forward guy.
It must be nice living in a world without nuance, complexity or tradeoffs. Where there is only one side to every story. Where every problem can be solved with a sweeping, blanket statement about how if only THEY would stop doing this to us, everything would be fine. Ignorance is bliss, I guess.
Who would have ever thought that an IP address could become your new identity! LOL!
” It was easy to detect this abuse, as these people had multiple IP addresses eminating from the same physical address in the countryside” You have no fucking clue what you’re talking about lol
I worked in IT for thirty years and I had the exact same thought when I read this nonsense. Gullible fools!
Phoenix
For those those cashing in on this scam, those days are over thanks to Musk and DOGE.
Phoenix
your comment:
“You have no fucking clue what you’re talking about lol”
This e-mail violates Wolf’s guidelines by a gigantic margin. I’m surprised he let it go through. If this keeps up I will respond to you in kind.
You guys are all so angry. Got to stop watching YT and being a tool, man.
Misplaced anger is the telltale sign. I have co-workers and a mother suffering from it. No way to live out your life.
Concur, as a software engineer. You clearly don’t understand anything about IP addresses.
Wolf’s guidelines
8. Comments that are in bad faith, badger other commenters, or attack other commenters ad hominem may go into the shredder. If you criticize, please target the comment, not the person.
Phoenix,
I personally know of a person who is currently employed by by two Federal agencies with work from home jobs, while working from home for a private company. Has been doing this since 2023. He knows it will stop at some point, until then, he will continue.
Just like it happens in the private sector, it also happens in the public sector.
How dare you suggest that anyone working for the government could be corrupt. Only people in private industry can be criminals.
Nunya,
Right. Because federal government agencies don’t do a background check and will not be able to verify if a potential employee’s SSN is already registered as an employee at another federal agency. A basic background check that even the cheapest ride share/ gig economy delivery service uses is not available to a federal government agency.
Franwex,
Not sure what the sarcastic comment is for. This is a fact. I’m not suggesting 1 million people are doing this. Just pointing out that me, one person, personally knows one person doing this currently with two Federal agencies. Whether there are checks and balances is not what I’m pointing out. Whether there SHOULD be checks and balances is also not what I’m pointing out. Whether it’s ethical, illegal, against the company/agency policy is not what I’m pointing out. Just pointing out facts.
If it sounds incredulous to you, that doesn’t change the facts. As an example, I always found it hard to believe someone could binge watch a show for 3 days straight. I always thought people were just making that stuff up because who would purposely sit on their house for 3 days and do nothing but watch a show? Lo and behold, I saw it with my own eyes, and I understood it is possible.
In addition, one of my neighbors works in IT and has been working two jobs since 2022. One is a large publicly traded company, the second is a smaller private company. Neither company has a policy regarding having a second job.
I work from home and my company does not have a policy related to having a second job. They only require that I report conflicts of interest. Its a grey area.
Nunya
Fair enough. In the private sector it is possible to do that. I don’t mind if people are doing it either. More power to them. It does seem strange that at the federal level they are double jobbing. Unless of course there is nothing in the contract that prevents it, and there is no conflict of interest involved.
I’ll take “tell me you don’t work in IT, without telling me you don’t work in IT” for 100, Alex! I laughed, I cried.
How could Musk determine that multiple IP addresses were from the same physical address? And even if he could, how does he know that multiple working people don’t all live at the same address?
Because it’s from the genuis mind of Musk…brought to you by Carl’s Jr…”Fxxk you I am eating!” oops I mean brought to you by DOGE
taxpayer, Give me a break
Yep, Some dude working out of his farmhouse in the middle of nowhere needs 2 or 3 Internet connections, is WFH on some useless government job that should have eliminated a long time ago, then has a Real Estate License and another gig job where he files a schedule C which the IRS has on file. You don’t need Musk to find out what is going on here. Any 6th grader could figure it all out.
Every computer on the same wifi router has the public IP address. So if you have a personal computer, a worker computer and your spouse has a personal and work computer and your children have personal computers. That’s 6 computers with the same IP address despite people having one job. I have two personal computers and a work computer and only 1 job.
It gets more complicated if vpns are involved. Some work computers connect through vpns. And some people use vpns to spoof different locations I did this to watch Netflix while in Colombia because without it certain shows were blocked. My IP address said I was in the US despite being in Colombia.
While I don’t mind debate, it’s pointless if someone doesn’t understand the technology they’re talking about and it makes it hard to take future comments seriously because it shows – having verifiable facts and understanding the technology isn’t important to them.
Isn’t Mar-a-lago an example of working from home? Trump could set an example to follow in regards to the points you mentioned.
When the bureaucrats become president, they can make the rules. I’m sure the CEO of Amazon works from home sometimes.
Wow, I had been trying to figure out for a while if you were normal or a nutter. Now I know.
Howdy Folks. Lots of hissing goin on, even in the Stock market. Will the golden age keep the bubbles from bursting???? Could happen. Times are sure are different today…. Conservatives buying Tesla s ???? I sure did not see that coming either , so who knows what will really happen……..
Conservatives buying Tesla s ????
Tell me more about these conservatives you’re referring to…
I feel like I see fewer and fewer people on the Republican side of the spectrum could actually be defined as “conservative” on many issues, so maybe I’m missing something
Howdy Just d b. NOT many fiscal conservatives anymore either. Guess I should have typed, so called conservatives like the talking heads on TV and internet…..
There are plenty of people who are fiscal conservatives. They just don’t number among our elected representatives, or members of our media.
I guess I also think of the word conservative as defining a person who takes a cautious approach to things.
Hedging their bets would sound conservative to me.
But so many of the so-called conservatives seem to go all in on a particular way of thinking.
For full throated Trump supporters for instance, I can’t imagine there’s a conservative among them.
Generally they just seem to accept what he tells them, and figure that it will all work out (even if they disagree with a certain policy like deficit spending).
Anyway, that’s just an example of who’s definitely not conservative to me. Regards,
JDB
As was noted in the national media, this is a painful situation spread out among all regions, and even as far off as Australia there are high housing prices because their economy tracks what’s going on in the U.S., but part of the problem is foreign-related because Chinese buyers are snapping up homes in established Western countries and leaving them empty, in effect sitting on them.
The volatile housing market — atypically, bounced up year after year on the strength of government factors that are hard to correct — was worsened in recent years after meta-situational economic indicators were tweaked in favor of escalating home prices.
This strange market situation is a recipe for disaster that is harming the dreams of many as greed and situational awareness combine to make home ownership an impossible dream.
OMGorksneed! Chinese money slippin’ in to buy houses! Why that’s technically an invasion of our soils. Quick, invoke an antiquated war powers act and round up those empty crapshacks on the next flight to a banana republik. The war on house gangs must not be lost! Or we could simply close the borders on foreign land purchasing altogether.
The idea that Chinese are swooping in again to buy up houses are not as far fetch as one might think. I can definitely see a resurgence of that in popular markets in SoCal (not that it ever stopped) couple with this adminstration now wanting to sell gold card for $5M a pop..it will only encourage and not deter them from buying IMHO…
Then again if these people think our current admin is more of a threat than what they have at home and less stable, it might deter them to buy and park their money here.
It hardly matters who it is. American soil is for Americans, permanent alien residents, and Native peoples. Don’t let anyone else have what they don’t have to die to defend. Block ‘em with a blanket ban. Stuck with federal cash to blow? Tough titties. Visit one of our many fine tattoo parlors down by the ports where your country is dumping all your excess junk. BTW…there will be a warship tax on the way out or you can do your own work keeping the trade routes open! Now get off the lawn!
Actually, this was such a big problem in Canada that British Columbia added a 15% surcharge in 2016 to home purchasers from outside the country.
It started prior to the 1997 repatriation of Hong Kong by China when many of the wealthier folks were trying to hide their money, but then it continued after that and made home prices virtually unaffordable for large percentage of the local population.
Go try to buy real estate in China. There’s no reason why the US should not have reciprocal rules on other countries that deny us access to their markets.
That’s why Vancouver’s housing prices are so high. A lot of Chinese investment.
Similarly after the last housing bubble Chinese investors bought up lots of housing on the costs.
I believe Canada banned foreign investors from buying properties 2 years ago. It would be great to the US do the same.
Update on the MIL home listed Sat. $145 per sq ft. Edmond Ok plenty of inventory.
New homes sell for 250-300 a sq ft
Lots of homes on the market. We listed our 3100 Sq ft older home no updates built in 1978. MIL estate home. Listed Sat.
10 showings in 4 days and had an offer yesterday.
Full list price accepted today!! If the home is priced right they sell.
Howdy BS. ” If the home is priced right they sell”
YEP, YES SIR and will sell anytime anyplace just about.
Hello,
1) I’m seeing a typo. here:
“In the South, the seasonally adjusted annual rate of sales rose to 1,190,000 homes, the worst February since 2011.”
The chart for the South shows 1.91M.
2) The MSM and the NAR today are cheerleading these numbers, as they “beat expectations,” or increased a little, or something. However, the chart base is at a 30 year low…
3) Few, such as WR is calling out the hypocrisy of “The emperor has no clothes,” meaning that it’s the price, stupid! Prices are too darn high. Said another way, affordability is at 30+ year lows. Few, such as WR are calling out how we got here either. Enjoy your “wealth effect” from massive market interventions .gov and the Fed. BTW, it cuts both ways.
4) Prices are still largely at sub-3% interest rates, but rates are now near 7% (high 6’s). Rates aren’t the problem, it’s price. Rates are sort of in the historical range now. It’s the monthly payment that matters.
5) In most U.S. MSAs, it’s still less expensive to rent vs. buy, and by a lot, just based on P&I, and not including all of the other carrying costs, including homeowner’s insurance, property taxes, HOA fees, maintenance and repairs, which have increased bigly since the pandemic.
6) The U.S. housing market is still frozen and FUBAR. Buyer’s are justifiably on strike.
7) The massive distortions in the U.S. housing market are shown by the fact that new houses are less expensive than used/existing/resale houses.
8) Asset bubbles – and both housing and stonks are in such a bubble – always burst. No exceptions.
9) Canada is worser though, so there’s that.
10) Have a nice day!
Here in the Chicago there are lots of TV ads for companies that buy homes “as is”.
My guess is they do a clean up and modest repairs to make it look a bit attractive and then rent them out.
Also, anecdotally, we see fewer ‘For Sale’ than we ever have in our memory (admittedly geezer old).
I am waiting for the proverbial (or maybe not so proverbial) “blood in the streets” in the stock and housing markets. I may have a long wait, a short wait, or it may never happen. There are a lot of advantages to renting, as mentioned many times on this site. I enjoy the weather in the SF Bay Area, but not the high prices and the crazies. So if the price is right, I’ll move. Prices are not even close to being right.
Thankfully, people don’t really know the numbers or data.
“The seasonally adjusted annual rate of sales of existing homes, on a month-to-month basis, ticked up to a rate of 4.26 million, the worst February since February 2009.”
BUT: higher than “the consensus expectation.” The bar is so low that we’re almost tripping over it. Just lower expectations and forget the fundamentals.
AI? We have a chip named after a smart person! (Up a kagillion)
Housing? Look, we made a sale! (Not dead yet: Trum will lower rates and fix it!)
Construction: Actually still producing and profitable (what? Real economy!?!)
Stocks: It’s probably time for you (retail bag holder… err investor, to BUY the DIP!)
Crypto? New Gold! So what if total market cap is down a trillion?
Get ready for years of a frozen market thanks to the fed slowing down QT to just $20b/month. QE $120B/month up to a $9 TRILLION balance sheet, then take their sweet ol’ time offloading the bailouts. Meanwhile inflation is still not near their target four years later and they don’t think they’ll even make any progress on that this year.
Truly sickening.
FDX is latest to say the economy may be slowing. They literally sh’t the bed with their their earnings.
‘FedEx said a weaker industrial economy produced a “challenging” quarter that caused it to trim its outlook for later this year, a sign of possible cooling in the wider economy.’
FedEx is being not so slowly transformed into an Indian company.
The glory days are past.
In my own personal used house shopping world,
(bottom end houses in inner Boston suburbs)
things seem to be getting back to normal, if you
consider normal adding listings on Thursday/Friday,
and selling on Monday/Tuesday. Even the smarmy
“offers due by” language seems to have made a
return.
I will say that the inventory of houses in the price
range and locations of interest to me in is a whole
lot lower the past two or three months, compared
to the past few years.
The only piece of real estate that has caught my
eye and did not sell, caught it in a bad way. The
seller was asking about a 40% markup from when
they recently bought the place. They removed the
existing house, leaving only a foundation on the lot.
I figure that some builder got in over their head,
and priced the thing wishing to still turn a profit.
Your technical explanation makes no sense. Ive got many IP addresses(watches, phones, iPad, TV’s, etc.)one of each in fact, which of course goes through a router to an ISP. Not suggesting people weren’t working multiple jobs just that DOGE wasn’t tracking people’s internal IP addresses in houses to detect this. The IP address is hardly ever static externally in any event and most people working would additionally be going through VPN.
Tracking people via their IP address is a long way from the only way to identify a person or more easily a computer/device.
A VPN should help, providing appropriate usage is made of the resulting network access in order to prevent fingerprinting etc.
Buyers strike = buyers middle finger to INSANE home prices.
Buyers strike = buyers middle finger to an INSANELY manipulated market.
Buyers strike = we’re mad as hell and we’re not going to take it any longer.
Yeah, but it’s kind of like two dudes with a suicide pact and one wusses out at the last moment.
You’re stuck houseless and your buddy gets to stop wasting on rent.
Buyers always have the option of waiting out by renting.
At these crazy price and rates, it is way cheaper to rent than to buy.
In my hood, it takes $13K/month to buy , $6K to rent.
Update from my little slice of flyover.
Existing home sales down (inventory up). New builds slower. In my area very few spec homes…hard learned lesson from GFC.
Land prices….still climbing (inventory down).
Off topic, a new imploded SPAC: Benson Hill $BHIL
I know there are more interesting things going on in the market nowadays, but BHIL is a neat case study for a variety of reasons. Thought you might enjoy a break from tariffs/inflation/etc lol
Thanks. That would have been a fun one. I’ve never heard of them, but maybe that’s just me. If you’re in the seed or ag business, you might know them.
Your charts are interesting. What they say is either 1) We’re screwed as a nation. Things are bad and are going to get much worse, or 2) Housing prices are set up for a MASSIVE correction. And if it # 2 happens, # 1 may occur as well, because a massive fall in home prices would greatly reduce the wealth of all homeowners.
These charts are the current snapshot of home sales in a (supposedly) good economy?
If so, look out!
I’d hate to see home sales in an economic recession or depression.
If prices drop enough, home sales will take off. The problem is price, and that problem can be solved with lower prices.
Imagine if the stock market functioned like the housing market is currently functioning. Existing home sales are at a 30 year low! Nobody wants to buy due to sky high prices. Imagine if the
NYSE was in such a dire situation – stocks so expensive, nobody wanted to buy them – sales were at 30 year lows. Sellers so stubborn or greedy that they refused to lower prices. We’d be in Great Depression 2.0! It puts a little perspective on how dysfunctional the current housing market is.
Rich people still have an incredible amount of excess money! All that QE will never wear off. Or maybe that’s the point: bleed it out of all but the billionaire class so that, relatively, they are even wealthier than before.
High prices, high insurance, and high taxes drastically reduce affordability. It’s time for another man made crisis to develop in 2025 to cause panic and downward pressure on markets. The socialized medical and welfare system for illegals aliens cord has been cut. I read today that California spent $24 billion on the homeless since 2020. Lots of states have budget problems that the US Federal Government will no longer be footing the bill. I can’t figure out why my state of Colorado can’t fix potholes or repair the damn roads. Where have all the $YOLO warriors gone? Is the $FOMO crowd on the sideline waiting for spring? Fear and uncertainty are on deck after only 2 months of the changing of the guard? Don’t miss out on the crypto boom that will change life for the masses forever.
Some condos in my town have a “ $750 annual deferred water/sewer assessment for 33 years.”, presumably because the City knows the assessment wouldn’t pass their own rules. Two random people I know told me their (cheaper) developments have similar BS fees.
The question is, is this just a big scheme to lower the permitting component of the cost of housing so that it is not part of the bank’s loan ratios used to approve mortgage applications, thus basically pushing people to borrow more than they should?
Not sure where else to put this question.
If the stock market stays down for the next 6 months and buyers stay in the side this Spring, I think we’ll probably finally see some larger price downsides. If the stock market pops back up and buyers keep coming out I feel like this could go on for years.