During COVID-19 and during the housing bubble burst in 2007, existing home sales collapsed near the lows. Additionally, inventory has decreased for the fourth month running, while days on market have increased!
The National Association of Realtors (NAR) Chief Economist Lawrence Yun said that November’s residential real estate market resembled the lockdowns seen during COVID-19 in 2020 in terms of sales activity. As a result of the rapid increase in mortgage rates, Yun suggests that the affordability of housing was hurt and that homeowners were less motivated to list their properties. Furthermore, inventory levels of available housing remain low.
Inventory of Housing
The number of active listings has dropped to almost 900,000 from the highs of the four-decade average between 2 million and 2.5 million listings.
This is the fourth consecutive month that inventory has declined in the NAR report. Inventory is now at 1.14 million. This year’s all-time low was around 860,000, and 2007’s all-time high was a little over 4 million.
For ten years, the traditional view of housing has been that when demand falls, inventory rises, which is what happened during the housing bubble burst years.
Applications for Purchases
Another positive trend data line report was presented for forward-looking purchase applications. Although the week-to-week decline was only 0.1%, the year-over-year decline is now 36%. This is 10% higher than the lows we had in 2022 when this index had declined 46% compared to 2021.
As a result of a surge in purchase applications from October 2021 to January 2022, existing home sales reached 6.49 million in January. During the months of October through January, all housing data, especially purchase applications, would have extremely difficult comps to work with.
To get more home sales in 2023, we need to see new listing data grow. The fact that new listings are negative might be seen as a good thing by some since it means inventory is stable for the housing market. Housing markets should not be viewed in this manner. Listing homes and moving when people want are what we want to see.
