3rd Look at Local Housing Markets in October; California Sales off 37% YoY, Prices Fall; Early Read on October Sales

First from housing economist Tom Lawler:

Early Read on Existing Home Sales in October

Based on publicly-available local realtor/MLS reports released across the country through today, I project that existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 4.49 million in October, down 4.7% from September’s preliminary pace and down 27.5% from last October’s seasonally adjusted pace.  On an unadjusted basis the YOY % decline in sales was largest in the West, and smallest in the Northeast and Midwest.

Local realtor reports, as well as reports from national inventory trackers, suggest that the inventory of existing homes for sale last month was up substantially from a year earlier, and that the YOY % gain was higher than that seen in September. However, the NAR’s estimate may not show the same increase as these reports suggest, as most of these reports exclude listings with pending contracts.  E.g., the Realtor.com report for October showed that listings excluding those with pending contracts were up 33.5% from last October, while listings including pending contracts were up just 0.5% YOY.  The NAR’s inventory estimate has tracked the Realtor.com total inventory measure much more closely than the “ex-pendings” inventory measure, and appears to include pending listings, which are down sharply from a year ago.  (Note also that the Realtor.com inventory number reflects average listings during the month, while the NAR inventory number is an end-of-month estimate.)  Just as the NAR inventory numbers understated the decline in “effective” homes for sale during much of last year, they are now significantly understating the recent increase in effective inventory.

Finally, local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 7.0% from last October.

Third Look at Local Market in October

This is the third look at local markets in October. I’m tracking about 35 local housing markets in the US. Some of the 35 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Closed sales in October were mostly for contracts signed in August and September. Mortgage rates moved higher in September, and that impacted closed sales in October.

The further sharp increase in mortgage rates in October - with the 30-year mortgage over 7% - will impact closed sales in November and December.

California Home Sales Down 37% YoY in October, Prices Decline, Inventory Increases

California doesn’t report monthly inventory numbers, but they do report the change in months of inventory. Here is the press release from the California Association of Realtors® (C.A.R.): California home sales bear brunt of higher interest rates in October, C.A.R. reports

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 274,040 in October, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2022 if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. October’s sales pace was down 10.4 percent on a monthly basis from 305,680 in September and down 36.9 percent from a year ago, when 434,170 homes were sold on an annualized basis. …

California’s median home price declined 2.5 percent in October to $801,190 from the $821,680 recorded in September. The October price was 0.3 percent higher than the $798,440 recorded last October and was the smallest year-over-year price gain in 29 months. October marked the fifth consecutive month with a single-digit annual price increase. With the average 30-year fixed mortgage rate expected to remain above 6.5 percent for the rest of the year, home prices will moderate further in the coming months as affordability remains a challenge. …

The statewide Unsold Inventory Index (UII) increased to 3.3 months in October 2022 from 2.9 months recorded in the prior month and from 1.8 months recorded in the same period a year ago.

emphasis added

Active Inventory in October

Here is a summary of active listings for these housing markets in October.

Inventory in these markets were down 31% YoY in January, down 6% YoY in April, and are now up 59% YoY! So, this is a significant change from earlier this year, and a larger YoY inventory increase than in September (up 50% YoY).

Notes for all tables:

1. New additions to table in BOLD.

2. Northwest (Seattle), Santa Clara (San Jose), Jacksonville, Source: Northeast Florida Association of REALTORS®

3. Totals do not include Atlanta, Denver or Minneapolis (included in state totals)

   

New Listings in October

And here is a table for new listings in October. For these areas, new listings were down 17.9% YoY. Potential sellers locked into their current homes with low mortgage rates has pushed down new listings.

Last month, new listings in these markets were down 13.8% YoY.

Closed Sales in October

And a table of October sales.

In October, sales were down 29.2% YoY Not Seasonally Adjusted (NSA) for these markets.

Here is a table comparing the year-over-year Not Seasonally Adjusted (NSA) declines in sales this year from the National Association of Realtors® (NAR) with the local markets I track. So far, these measures have tracked closely, and the preliminary data below suggests a sharp decline in sales in October.

NOTE: Housing economist Tom Lawler expects the NAR to report sales of 4.49 million SAAR for October (the NAR reports this coming Friday). The consensus is for the NAR to report 4.39 million.

Sales in some of the hottest markets are down around 40% YoY (all of California was down 37%), whereas in other markets, sales are only down in around 20% YoY.

Note that in October 2022, there were the same number of selling days as in October 2021, so the SA decline will be similar to the NSA decline. And this suggests another step down in sales!

More local markets to come!