Existing home sales rise from multi-decade rock-bottom, still -34% from 2021, -22% from 2019. Supply highest for November since 2018, days on market highest since 2019.
By Wolf Richter for WOLF STREET.
Sales of existing single-family houses, townhouses, condos, and co-ops that closed in November fell to 315,000 homes, according to data from the National Association of Realtors today. During the holiday period – from November through January – sales always drop from the prior months and reach the yearly low in January, and inventories drop too as people pull their homes off the market over the holidays.
Year-over-year, sales rose by 5.0% not seasonally adjusted, from the collapsed sales that closed in November last year after mortgage rates had briefly hit 8%. But compared to November 2021, sales were down by 37%. That’s the extent of demand destruction brought about by too-high prices.
The seasonally adjusted annual rate of sales, which attempts to iron out the seasonal decline over the holidays and multiplies this out to a 12-month period, rose by 4.8% in November from October to an annual rate of 4.15 million homes. This was still down by 34% from the same period in 2021 and by 22% from 2019, wobbling along the bottom for two years (historic data via YCharts):
Buyers’ strike leads to lowest annual sales since 1995.
The demand destruction in 2024 has been even larger than during the Housing Bust. With today’s actual sales figures for November (not seasonally adjusted), the WOLF STREET estimate for the whole year 2024 comes in at 4.04 million sales, the lowest since 1995, below even the worst years during the Housing Bust.
During the Housing Bust, demand destruction was caused by an economic and financial meltdown that had been preceded by years of reckless mortgage lending that then came home to roost and turned into the mortgage crisis.
But the 2023 and 2024 demand destruction was caused by a gigantic spike in prices – the NAR’s national median price shot up by nearly 50% from June 2019 through June 2022 – and then in 2023, mortgage rates returned to normal-ish levels in the 6%-7% range, up from the pandemic’s free-money range of less than 3% (historical data from YCharts).
Getting used to 6% to 7% mortgage rates.
The real estate industry has now given up on trying to outwait those mortgage rates and is exhorting sellers and buyers to get used to “a new normal of mortgage rates between 6% and 7%,” as the NAR put it today.
These 6% to 7% mortgage rates are of course the old normal mortgage rates that prevailed in the decades before the money-printing era of 2008 through 2021, and they’re unlikely to go back to the pandemic range.
Fannie Mae, the largest Government Sponsored Enterprise that buys and guarantees mortgages, came out earlier this month, encouraging mortgage investors, the real estate industry, home sellers, and home buyers to get used to these 6% to 7% mortgage rates:
“It is unlikely we will again see the low mortgage rates we had during the COVID-19 pandemic,” Fannie Mae wrote in a blog post, adding that “current mortgage rates and Fannie Mae’s forecast for 2025 rates are well in line with rates over the past several decades. Since 1990, the 30-year fixed-rate mortgage has averaged 6%.”
The average 30-year fixed mortgage rate rose to 7.14% today, according to the daily measure by Mortgage News Daily.
Freddie Mac’s weekly measure of the average 30-year fixed mortgage rate rose to 6.72% today.
Mortgage rates track the 10-year but at a higher level, with a spread between them that varies. And the 10-year yield has jumped by nearly 20 basis points to 4.58% since the Fed’s rate cut yesterday.
Mortgage rates have been above 6% since mid-2022. The market might as well get used to this mortgage rates and deal with them – and lower prices, after the ridiculous spike, will bring up the volume.
Before the 2008-2021 money printing era, 5% mortgages had been essentially unheard of:
Highest supply for any November since 2018.
Supply of unsold existing homes on the market, at 3.8 months (red line in the chart below), was the second highest for any November over the eight years 2017 through 2024, behind only 2018 (yellow). And that is plenty of supply.
Unsold inventory dipped to 1.33 million homes in November, as homes got pulled off the market over the holidays and as new listings declined from the prior month, as they always do over the holiday period.
Days on the market keep rising.
The median number of days before the home is either sold or pulled off the market because it failed to sell rose to 62 days in November, the most for any November since 2019, and up from 52 days a year ago, according to data from Realtor.com.
This is in part a measure of how motivated sellers are by letting their home sit on the market when it doesn’t sell right away.
Prices are way too high.
The median price of single-family houses edged down in November to $410,900, with the past three months in roughly a holding pattern, in line with pre-pandemic seasonality over those months through December. This seasonal pattern is usually followed by a big drop in January. Year-over-year, the price was up by 4.8%.
In the three years between June 2019 and June 2022, this national median price had exploded by nearly 50%, on top of the large price gains in prior 10 years, and this — driven at the time by the Fed’s interest-rate repression and money-printing schemes — has become the #1 problem in the housing market today:
The median price of condos and co-ops dipped to $359,800 in November, for a year-over-year gain of 2.8%. Unlike single-family house prices, the median condo price didn’t experience any outright year-over-year declines in mid-2023.
But home prices vary widely by metro. They have been dropping in some metros since 2022, but continued to rise in other metros through the summer, with declines now getting started in metros even where prices are not seasonal, based on Zillow’s “raw” mid-tier home price index. The two bookends of our series covering 33 markets, The Most Splendid Housing Bubbles in America, show the divergence, with Austin prices having plunged by 22% from the peak in mid-2022, while prices in the New York City metro eked out gains through October before seeing the first dip:
Demand destruction by region.
The charts below show the seasonally adjusted annual rate of sales, released by the NAR today, in the four Census Regions of the US. A map of the four regions is in the comments below the article.
Northeastern US: The seasonally adjusted annual rate of sales rose to 510,000 homes:
Midwestern US: The seasonally adjusted annual rate of sales rose to 1,000,000 homes.
Southern US: The seasonally adjusted annual rate of sales rose to 1,870,000 homes.
Western US: The seasonally adjusted annual rate of sales unchanged at 770,000:
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Inflation Mandate: Jerome Powell’s Federal Reserve is working hard to get the population to capitulate to the sky high asset prices of housing and then to accept a normal rate mortgage to pair with it; truly creating 30 year indentured “house poor” generation(s).
Employment Mandate: Of course with that asset capitulation is maintaining demand; otherwise without capitulation there is “demand destruction.”
Are RE agents and the rest of the industry now going to tell people to lower their prices so they can start making commission checks again?
Generally, not until after the listing agreement is signed!
RE Agents,
A couple I know are starting divorce proceedings. The realtor strongly recommended they lower their expectations and significantly drop the price to ensure a quick sale. The Ms refused and thought the price should be even higher. This will end very poorly for them.
I think RE agents always ask selling to lower price and buyers to increase budget. This is the way to ensure a deal is made. Only when a deal is made the agent gets a cut.
Once they’re hired. But if the selling agent is still in the courtship period, trying to convince sellers to use him/her (instead of a competing agent) to represent them, the agent has incentive to promise the sellers he/she can get a high price.
I am curious how much realtors are charging for their services now. There were supposed to be changes after the settlement of the lawsuit against the National Association of Realtors earlier this year.
Any changes to their commissions or fees? Any changes to how they are working with buyers or sellers? I have not talked with anyone buying or selling a home recently.
Anyone know?
RE agents are pushing back hard on transparency requirements, and would desperately like to return to 1970s age of data opacity, where only agents had access to listings, price changes, days on market, commissions paid, agent performance, etc. They see the removal of buyer agent commission sharing as the first battle win of this war. However IMHO the Internet data genie is out of the bottle, and they won’t be able to put it back.
Yes! Why is no one talking about this? Will it even make a difference if seller and buyer split the commission since most sellers will be buyers?
RE Agents may consider relocating the New Jersey. That’s the only state in the US that still outlaws pumping your own gas. There are many openings for gas station attendants in that state.
Good news article. Thank you for this research.
Nothing selling where I live, and no one dropping their asking. I’ve seen this before here, in the late aughts, when houses simply did not sell….for years. 7% is a very reasonable mortgage rate and may push people into more realistic and affordable choices.
I want to buy but I’ll stick with renting for years if I have to. I’ll wait this one out so that I’m not house poor. Prices in Tampa are still so out of wack. A $600k+ house nearby was recently listed for a 1,400 sf home built before 1950. I just don’t understand. Wood frame instead of block. Many more “for sale” signs in a few neighborhoods I’ve driven through the past couple weeks. And that anecdotal increase of listings is between Thanksgiving and Christmas.
Happy holidays all. Safe travels to those who are doing so. Special wishing well for Wolf and Mrs. Every new Wolf Street article is a gift.
Seems clear that rates will stay higher for longer as inflation remains sticky — keeping pressure on mortgages, while home prices remain too high.
Also see: “Treasury yields’ continued rise Thursday comes even after Musk and Trump both came out in opposition to the government’s short-term funding bill that needs to pass by Friday night to avoid a shutdown.
The 10-year Treasury yield jumped eight basis points Thursday to 4.57%. It hit 4.59% intraday, the highest since the end of May. That’s after spiking 11 basis points on Wednesday.”
I see home prices trickling down slowly but not by much. It is going to take years for wages to catch up with all this Inflation so the average homeowner that wants to move or downsize simply can’t sell and give up 3% mortgages. New homes are overpriced for square feet they are offering in the range of $300/sqft. in the development right behind my house while existing homes for sale are less than $200/sqft. Those new buyers are fools.
House prices were significantly lower, even if using inflation adjusted amounts, before the money printer went brrr.
In the early 2000s, it used to be C$200,000 at that time, for a starter home in Vaughan or Markham, Canada.
In early 2022, those same homes went for a shopping C$1.5M on average.
“If you can keep your head when all about you
Are losing theirs…”
If Congress approves getting rid of the debt ceiling till 2027 (spend…SPEnd…SPEND!) would it be likely the 10-year bond, and perhaps MBS ,since they are somewhat correlated, would keep rising as a hedge for the very likely incoming tsunami of even more deficit spending? Watching all this play out and how it will affect people trying to buy a house or borrow money for home improvements is very concerning.
“Demand destruction by region.”
Wolf, does this region-specific data exist for new home sales?
Having done the math many times, it is cheaper for me to rent in the Bay Area than buy a fairly cheap house in either Texas or Florida. I am lucky in that my apartment is fairly quiet, crime is non-existent, the landlord fixes the important stuff, and California has a statewide rent control law. Possible long run appreciation from a house purchase does not matter to me, because, as Keynes once said, in the long run we are dead. If I was 20 or 30 I would probably think differently, but then I wouldn’t be able to afford these over-priced houses anyway.
The Federal Reserve chairman J. Powell and the FOMC may control short term rates but they cannot manipulate the longer term rates. The big question is if the huge increase in the median home price is a bubble? Time will tell…
I would image eventually there will be some distressed selling due to demographic aging, unemployment, etc. This is likely to soften the housing market a little help to bring prices back into better alignment with interest rates.
It went from “date the rate” to a shotgun wedding.
will never understand why Americans, probably the most mobile population in the western world, seem to generally want 30 year fixed rate mortgages ……. or is nothing else being offered ?
UP here, in the great country of Canada, just refinanced, 3 year fixed rate 4.5 %…….had been paying over 8% using 6 month fixed rate mtgs to bridge the high rate period……so two 6 month mtgs got me from the expiry of my previous 3 yr low rate mtg through the high rate period to new 4.5% mtg.
We typically can choose from 6 month term to 7 years ( longer term are available though rarely used ) with a range of rates reflecting current realities/future expectations.
As to house prices, no idea, though own a few and not selling…..want hard assets for what will be a challenging economic period with, imo, rather more inflation than we’re expecting……..
As ever….but what the f do I know…….
Adjustable Rate Mortgages (ARMs) and fixed-rate mortgages with 15-year and 20-year terms, and other types of mortgages are widely available. But a government guaranteed 30-year with a 3% fixed rate is hard to beat. And that’s what they got before 2022.
30-year loan gives the buyer great optionality to either lock in their rate forever, OR lower by refinancing. For those of us who took out mortgages before 2022, the bank is now stuck loaning us money at 3% forever — great deal for us, bad deal for the bank. And practically everyone refinanced down between 2019-2022 if they had the ability to do so.