Existing home prices are down 11% from Peak. Sales Reach Lockdown Low. Cash buyers and investors are pulling back hard

Priced right, any home will sell. But sellers don’t want to price their homes right.

By Wolf Richter for WOLF STREET.

This is getting brutal: Sales of formerly owned homes, condos and co-ops fell 1.5% in December from November, the 11th straight month of monthly declines, and 34% year over year, according to the National Association or Realtors today.

Priced right, virtually any home will sell, but sellers don’t want to price their homes right. And would-be sellers are sitting on their empty homes, hoping for a quick end to this recession, or they’re putting it on the rental market or trying to make it a vacation, instead of dealing with the reality of a stunning housing bubble ringing loudly. has jumped (historical data via YCharts):

Actual sale in December — not the “seasonally adjusted annual percentage” of sales — fell 36.3% year-over-year to 326,000 homes (from 513,000 homes a year ago), according to the NAR.

The average price homes of all types that closed sales in November fell to $366,900 for the sixth month in a row, down 11.3% from their peak in June. This decline caused year-over-year gains to drop to just 2.3%, from a year-over-year gain of 16% in the spring of 2022.

Only part of this price drop from June to December is seasonal: the average drop from June to December over the six years before the pandemic was 5.8%, with a maximum drop of 6.4% and a minimum drop of 3.8 %. This shows that the current decline of 11.3% goes well beyond the maximum seasonal decline.

Additional confirmation that much of this decline was not seasonal is provided by the rapidly decreasing year-on-year price gains, down to just 2.3%, from 16% in December 2021 to Spring 2022 (historical data via YCharts):

In some markets, the median price has fallen even further. In the San Francisco Bay Area, for example, the median price is down 30% from its peak in April 2022, and 10% year-over-year, according to the California Association of Realtors. But other markets lag behind to produce the overall national average.

All-cash buyers, investors and second home buyers pulled out en masse. Cash sales were down 22% year-over-year to 92,000 homes (28% of 328,000 homes sold), down from 118,000 in December 2021 (23% of 513,000 homes sold). In other words, buyers paying cash also didn’t want to buy these overpriced homes, even though they didn’t have to worry about getting a large mortgage.

Sales to individual investors or second home buyers fell 27% to 52,500 homes (16% of 328,000 homes sold), from 71,800 in December 2021 (14% of 513,000 homes sold). They also withdrew from this market.

Sale of single-family homes fell 1.1% from November and 33.5% year-on-year in December, to a seasonally adjusted annual rate of 3.64 million homes.

Sale of apartments and cooperatives was down 4.5% in December from November, and 38.2% year-over-year, to a seasonally adjusted annual rate of 420,000 units.

Sales plummeted in all regions, but dived most in the West. Percent change year over year (NAR map of regions):

Active listings jumped 55% from a year ago, to 68,900 in December (active listings = total inventory for sale minus properties with pending sales). Just before the holiday season, many sellers take their homes off the market and then put them back on the market for the spring selling season. This happens every year; active list starts dropping before Thanksgiving and doesn’t rise again until spring (data via realtor.com):

Active listings, while soaring from a year ago, are still relatively low as potential sellers are determined to wait out what they expect to be a short ripple in the market, as they put their empty homes on the rental market and they try to make some money by renting out their empty house as a holiday home. And many are just sitting on their empty homes that they hadn’t sold because they wanted to climb the market all the way to the top with huge profits of 20% or 30% a year. But that show is over. And now?

Average days on the marketbefore the frustrated seller takes the house off the market, or before the house is sold, increased to 67 days (data via realtor.com):

Price reductions: Active listings with price cuts hit a new high for December in realtor.com’s data going back to 2016: 25% of active listings in December 2022 had price cuts, compared to, say, 17% in pre-pandemic December 2019.

December or January is usually the seasonal low for price cuts. Instead of lowering prices, many sellers are taking their homes off the market and waiting for the spring sales season before putting it back on the market. That sellers lower their prices to this extent during the holiday season shows that they are becoming a bit more aggressive.

Hoping for a quick turnaround from this recession: This combination of declining sales, decreasing prices, rising active listings, increasing days in the market before the home is drawn or sold, an increase in active listings with price cuts, but still tight supply, indicates that many potential sellers are still hoping for a quick turnaround from this downturn. And they leave the empty house to wait for better days, or they put it on the rental market or try to turn it into a holiday residence, instead of dealing with the reality of a frenzied housing bubble that is loud jumped.

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