Lawler: Early Read on Existing Home Sales in February

3rd Look at Local Housing Markets in February

This is the third look at local markets in February. I’m tracking about 40 local housing markets in the US. Some of the 40 markets are states, and some are metropolitan areas. I’ll update these tables throughout the month as additional data is released.

Lawler: Early Read on Existing Home Sales in February

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 4.51 million in February, up 12.75% from January’s preliminary pace and down 23.8% from last February’s seasonally adjusted pace.  On an unadjusted basis the YOY % decline in sales was largest in the Northeast and West and smallest in the Midwest and South.

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 similar to that seen in January. 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 while the NAR’s inventory estimate appears to include listings with pending contracts.  E.g., the Realtor.com report for February showed that the average number of listings excluding those with pending contracts last month was up 67.8% from last February compared to a YOY increase of 64.1% in January, while average listings including pending contracts were up just 13.3% YOY in February compared to a 12.3% YOY rise in January.  The NAR’s inventory estimate for the end of January was up 15.3% from a year earlier. 

Finally, local realtor/MLS reports suggest that the median existing single-family home sales price last month was up by about 1.3% from last February.  I estimate that the median existing SF home sales price in the West last month was down by about 5% YOY.

The National Association of Realtors (NAR) is scheduled to release February existing home sales on Tuesday, March 21, 2023, at 10:00 AM ET. The consensus is for 4.18 million SAAR.

The consensus is too low!

California Home Sales Down 33.2% YoY in February, Prices Decline 4.8% YoY

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.): More favorable interest rates perk up California home sales for third straight month in February, C.A.R. reports

• Existing, single-family home sales totaled 284,010 in February on a seasonally adjusted annualized rate, up 17.6 percent from January and down 33.2 percent from February 2022.

• February’s statewide median home price was $735,480, down 2.1 percent from January and down 4.8 percent from February 2022.
...
The lowest mortgage rates in five months helped boost California home sales to reach above the 250,000-unit annualized sales pace for the first time in four months, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 284,010 in February, 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 2023 if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

February’s sales pace was up 17.6 percent on a monthly basis from 241,520 in January and down 33.2 percent from a year ago, when a revised 425,120 homes were sold on an annualized basis. Despite the third straight monthly improvement, sales of existing single-family homes in California remained below the 300,000-unit pace for the fifth consecutive month.
...
• Housing inventory in California slipped to the lowest level in four months. Despite dipping from the month prior, the statewide unsold inventory index (UII) grew 60 percent from the 2.0 months recorded in February 2022 and registered 3.2 months in February 2023.

emphasis added

Active Inventory in February

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

Inventory in these markets were down 18% YoY in February a year ago and are now up 85% YoY! So, this is a significant change from early 2022, although this is a smaller YoY inventory increase than in January (up 99% 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 February

And here is a table for new listings in February. For these areas, new listings were down 16.5% YoY. Potential sellers that are locked into their current homes with low mortgage rates has pushed down new listings.

Last month, new listings in these markets were down 7.0% YoY. This is a larger YoY decline in new listings, and similar to the YoY declines in October, November and December.

Closed Sales in February

And a table of February sales.

In February, sales in these markets were down 23.7%. In January, these same markets were down 34.1% YoY Not Seasonally Adjusted (NSA).

This is a significantly smaller YoY decline NSA than in January for these early reporting markets.

This data suggests NAR reported sales will rebound in February. This will still be a significant YoY decline, and the 18th consecutive month with a YoY decline.

Note: Even if existing home sales activity bottomed in January there are usually two bottoms for housing - the first for activity and the second for prices.

More local markets to come!