Slowdown in Showings, Sharp Decline in California Pending Sales, Inventory Surges

Housing Economist Tom Lawler's May Existing Home Projection

There are three items in this note:

1. Housing economist Tom Lawler’s May existing home projection

2. Slowdown in Showings in the Twin Cities

3. A Sharp Decline in Pending Sales in California, Inventory Surges

Early Read on Existing Home Sales in May

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 5.35 million in May, down 4.6% from April’s preliminary pace and down 9.6% from last May’s seasonally adjusted pace. Unadjusted sales should show a smaller YOY % decline, reflecting this May’s higher business-day count compared to last May’s.

Local realtor reports, as well as reports from national inventory trackers, suggest that the inventory of existing homes for sale last month was up slightly from a year earlier. However, the NAR’s estimate may not show the same increase as other reports, many of which exclude listings with pending contracts. E.g., the Realtor.com report for May showed that listings excluding those with pending contracts were up 8.0% from last May, while listings including pending contracts were down 3.9% YOY. (Pending listings in the Realtor.com report were down 12.2% from last May.). The NAR’s inventory estimate has tracked the Realtor.com total inventory measure more closely that the “ex-pendings” inventory measure. (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.)

Finally, local realtor/MLS reports suggest the median existing single-family home sales price last month was up by about 14.7% from last May.

Note: The National Association of Realtors (NAR) is scheduled to release May existing home sales on Tuesday, June 21, 2022, at 10:00 AM ET. The consensus is for 5.41 million SAAR.

Slowdown in Showings in the Twin Cities

The following data is courtesy of David Arbit, Director of Research at the Minneapolis Area REALTORS® and NorthstarMLS (posted with permission). Here is a link to their data.

This graph shows the 7-day average showings for the Twin Cities area for 2019, 2020, 2021, and 2022. The 7-day average showings (red) is currently off 22% from 2019.

There was a huge dip in showings in 2020 (black) at the start of the pandemic, and then showing were well above 2019 (blue) levels for the rest of the year. And showings in 2021 (gold) were very strong in the first half of the year, and then were closer to 2019 in the 2nd half.

Note that there were dips in showings during holidays (July 4th, Memorial Day, Thanksgiving and Christmas), and also dips related to protests and curfews related to the deaths of George Floyd and Daunte Wright.

2022 (red) started off solid but is now below the previous three years.

Sharp Decline in Pending Sales in California, Inventory Surges

From the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.): Home sales in California dip below pre-pandemic levels as the effects of rising interest rates begin to show even as prices set another record, C.A.R. reports

May’s sales pace was down 9.8 percent on a monthly basis from 419,040 in April and down 15.2 percent from a year ago …

“Pending home sales declined 30.6 percent in May – the biggest drop since the first month of the pandemic – likely due to eroding affordability, rising mortgage rates and home prices, and the increased risk of a recession,” said C.A.R. Vice President and Chief Economist Jordan Levine …

With both closed sales and pending sales slowing by double-digits, total active listings experienced a gain of 46.7 percent in May, the largest year-over-year growth in at least the last 89 months. Active listings in May also climbed to the highest level since July 2020 and had a month-to-month increase of 26.4 percent from April.

emphasis added

This California report was for May. With the recent increase in mortgage rates, sales will decline further - and inventory will increase.

I’ll have more local market updates soon.