Lawler: Early Read on Existing Home Sales in November

Another Step Down for Sales in November

From housing economist Tom Lawler:

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 4.16 million in November, down 6.1% from October’s preliminary pace and down 34.3%% from last November’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 October. 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 November showed that the average number of listings excluding those with pending contracts was up 46.8% from last November compared to a YOY increase of 33.5% in October, while average listings including pending contracts were up just 3.0% YOY in November compared to an 0.5% rise in October.  The NAR’s inventory estimate for the end of October was actually down 0.8% from a year earlier.  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.  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 4.4% from last November.  While median prices on existing home sales can be significantly impacted by the mix of home sales and may not reflect changes in typical home values, it is worth noting that median sales prices in quite of few areas of the country last month were flat to down compared to a year ago, including but not limited to a large number of California counties, Phoenix, Austin, Ada County (includes Boise), Illinois, Des Moines, DC (city), and Memphis.

Consensus Forecast

CR Note: The National Association of Realtors (NAR) is scheduled to release November existing home sales on Wednesday, December 21, 2022, at 10:00 AM ET. The consensus is for 4.20 million SAAR, down from 4.43 million SAAR in October, and down from 6.33 million SAAR in November 2021.

The pandemic low was 4.01 million SAAR in May 2020.