Home News Housing Bubble Woes: Supply Jumps, Sales Drop, Median Price Skewed Higher by Shift in Mix as Bottom Falls Out below $500k, amid Holy-Moly Mortgage Rates

Housing Bubble Woes: Supply Jumps, Sales Drop, Median Price Skewed Higher by Shift in Mix as Bottom Falls Out below $500k, amid Holy-Moly Mortgage Rates

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California Special: Prices will begin to be “medium” until sales collapse by 30%, and prices for condos in San Francisco will fall year-on-year.

To Wolfrichter For Wolf Street..

Sales of single-family homes, condominiums, co-operatives, and townhouses that closed in May fell 3.4% from April based on seasonally adjusted annual sales, down 8.6% from the National Realter Association a year ago. did.Real Estate Agents Association report today.

Sales of single-family homes alone were down 7.7% year-on-year. Sales of condominiums and cooperatives decreased 15.3% year-on-year.

May fell below the same month last year for 10 consecutive months. With supply surged 12.6% in May, lack of inventory for sale is no longer an excuse. Y Charts):

“Given the challenges of affordable housing due to the surge in mortgage rates this year, we expect further declines in sales in the coming months,” the NAR report said.

Seasonally adjusted annual sales in May fell to 5.41 million units, the lowest since the closed sales rate (data from YCharts).

Inventory for sale and supply surges.

The number of homes for sale in May increased by 12.6% from April, increased by 100,000 in April, and then increased by 113,000, the highest since November at 1.16 million.

The supply of homes for sale increased year-on-year for the first time since the closure, from 2.2 months to 2.6 months in April and 2.5 months in May last year. This is a significant change from the January lows of 1.6 months (data from YCharts).

Sales by region.

Seasonally adjusted annual rate of change in total housing sales from April to May, and year-on-year (year-on-year):

  • Northeast: + 1.5% from April, -9.3% year-on-year.
  • Midwest: -5.3% from April, -7.5% year-on-year.
  • South: -2.8% from April, -8.4% year-on-year.
  • West: -5.3% from April, -10.0% year-on-year.

In California, closed sales plummeted and pending sales collapsed.

according to California Real Estate Agents Association (CAR) Sales of homes closed in May plummeted 15.2% year-on-year in May. Condominium sales plummeted 12.3%. These are closed sales.

According to the CAR report, May’s hold on sales (forecast to sell out the following month) is “probably due to lower affordable prices, higher mortgage rates and home prices, and increased risk of recession.” % Decreased.

Holy Molly Mortgage Interest Rate.

Mortgage News Daily’s daily measurements show that last week’s average 30-year fixed mortgage rate exceeded 6% for the first time since 2008. According to a recent reading by Freddie Mac last week, average mortgage rates soared to 5.78%.

These mortgage rates are so named because “Holy Molly” is what people say when they see mortgage payments for the ridiculously high prices of homes they want to buy.

However, sales closed in May are based on much lower previous month or two-month mortgage rates. Until mid-April, mortgage rates ranged from 4% to 5%. Mortgage rates in May were just over 5%.

The surge began with new momentum in June, and there is not much housing data for June yet. Luxury goods sales in Manhattan plummeted 70% year-on-year in the week leading up to June 19.However, it was mainly due to the stock market being sold out.

The May deal sale is primarily based on transactions negotiated in April, with pre-April mortgage rates where these buyers applied for a mortgage and obtained a mortgage rate lock that was valid for a period of time. It is included. The green box shows the mortgage rate roughly applied to home purchases that ended in May. It is about 4% to 5%.

The median price was pushed up by the shift to high-end sales of the mix.

In California: According to the California Real Estate Association, the median rose 9.9% year-on-year to $ 899,000. However, the median is sensitive to changes in the mix, and according to CAR, this price increase in the state “may be primarily due to the mix of sales, and the high-end market continues to outpace the more affordable market segment. increase. “

The change in the mix manifested itself in a $ 1 million home share, jumping to a record 35.3% share. Meanwhile, the share of homes under $ 500,000 hit a record low.

“But home prices could be flat, as monthly price increases appear modest,” CAR said. And this is already happening in San Francisco.

In san FranciscoThe median of condominiums fell 0.3% year-on-year. Median single-family homes in San Francisco rose 6.1%. This is the second lowest rise in California’s largest county, after Contra Costa County (East Bay), where median home prices rose only 1.0% year-over-year.

American A: According to the NAR, the median rose 14.8% from a year ago to $ 407,600. And again, as you can see, there was a big shift to the high end (data via YCharts):

The median price is distorted by changes in the mix.

My favorite illustration: To get the median in the market where 9 homes sold, list from highest to lowest price. The prices for the 5th from the top or the 5th from the bottom (same house) are: Middle price = median.

But if the two cheapest homes don’t sell and the remaining seven homes sell, then the fourth home is at the bottom or the fourth home is at the top in the middle. The actual price of the home hasn’t changed, but this mix change distorts the median metric.

This change in the mix has also happened in the United States...

Sales of homes priced below $ 500,000 plummeted, sales above $ 500,000 surged year-over-year, and these dramatic changes boosted the median, according to NAR data.

Investor sales and full cash sales share declined, but remained in the same range.

According to NAR, private investors or second-home buyers bought 16% of homes in May, down from 17% in April, 18% in March, 19% in February and 22% in January. did.

“Full cash” sales, including many investors and villa buyers, fell from 26% in April to 25% in May, but increased from 23% a year ago.

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