Energy News Beat
Demand destruction on an epic scale, after the price explosion. And inventories are piling up.
By Wolf Richter for WOLF STREET.
It boils down to this: In terms of condos, sales that closed in May fell further and hit the lowest point in the data, along with Lockdown May 2020, seasonally adjusted; supply spiked to the highest level since the Housing Bust.
In terms of single-family homes, sales inched up, but barely, and remained at historic lows, and below May 1995, seasonally adjusted; supply spiked to the highest level since 2016, according to data from the National Association of Realtors today.
A Condo Bust is unfolding.
Condo sales, which have been careening lower all year, dropped further in May to a seasonally adjusted annual rate of 360,000 condos, the lowest in the data going back through 2012, along with Lockdown May 2020. Sales were down by 38% from May 2019 and by over 50% from May 2021. Demand destruction on an epic scale, a result of prices having exploded in recent years far beyond what the market can bear (historical data from YCharts):
Supply of condos spiked to 6.7 months in May, the highest supply since the Housing Bust in July 2012 (historical data from YCharts):
Single-family home sales still below 1995, supply spikes.
Sales of single-family homes, which have been hobbling along the lowest levels since 1995, inched up a hair in May to a seasonally adjusted annual rate of 3.67 million homes, roughly flat with May 2024 – with 2024 having been the worst year since 1995. Sales were down by 23% from May 2019, down by 29% from May 2022, and down by 9% from May 1995 (historical data from YCharts):
Supply of single-family homes spiked to 4.6 months, the highest supply since July 2016:
When sales began plunging in 2022, the theory by the real estate promoters was that sales were plunging because there was a housing shortage and there was nothing to buy. But sales continued to plunge even as inventories rose, and now inventory is piling up and sales remain at collapsed levels, and the real reason is that prices have exploded beyond what the market can bear, and so demand has plunged because prices are way too high (historical data from YCharts).
Median price for condos and single-family homes.
The median price can be heavily skewed by changes in the mix of homes that sold. In the spring, nationally, a larger number of higher-end homes come on the market and sell, which changes the mix of what sold and shifts the national median price higher. It does the reverse in the fall and winter. This contributes to the seasonal ups and downs of the national median price. Nearly every year, the national median price peaks in June and then declines through January or February (the exception was 2020).
But the seasonal increases in May and in recent months have been weaker than in prior years, and the year-over-year gains have been melting away.
The median price of condos inched up just 0.3% to $371,300 in May from April, according to the National Association of Realtors today. That tiny uptick was far smaller than typical in May.
This measure of the national median price of condos has spiked by nearly 50% in five years, driven by the Fed’s interest-rate repression and FOMO.
In many cities, condo prices spiked by 60%, 70%, even 80% over those five years. Now prices are simply way too high and don’t make economic sense anymore.
So in many cities, condo prices peaked in 2022 or 2023 and then started careening lower. Here are 20 bigger cities where condo prices have dropped by 10% to 23% from their peaks, unraveling the most epic condo bubble ever. Other cities are following with a lag. Some have just recently turned the corner.
For example, Oakland: Condo prices have returned to where they’d been in April 2016. That was 9 years ago. The pace of the price drops accelerated, with a month-to-month drop of 1.7% in May, seasonally adjusted, according to the Zillow Home Value Index.
The year-over-year percentage gain of the national median price of condos was whittled down to just 0.7% in May, from +1.4% in April, and from the range of +10% to +23% during the price explosion in 2021 and 2022.
The median price of single-family homes rose to $427,800 in May, whittling the year-over-year gain down further to just 1.3%, the fifth month in a row of narrowing year-over-year gains (from +5.9% in December).
This measure of the national median price had exploded by 50% in the three years between June 2019 and June 2022, on top of the large price gains in the prior 10 years.
But lots of markets have turned. In 10 big cities, prices have declined by 8% to 22% from their peaks: Austin, Oakland, New Orleans, San Francisco, Washington D.C., Denver, Portland, Phoenix, Fort Worth, and San Antonio. Other big cities also experienced price declines but aren’t at 8% yet. Some smaller cities, such as Birmingham, have double digit price declines. So here are the 10 Big Cities with the Biggest Price Declines of Single-Family Homes. For example Austin:
Year-over-year, the national median price of single-family homes was up only 1.3% in May, the smallest gain since July 2023 when the national median price emerged from a period of year-over-year declines.
During the price explosion, the year-over-year increase peaked at 26% in mid-2021, which was completely nuts, and those too-high prices then triggered the epic demand destruction we’re now seeing. The market solution to this type of demand destruction is lower prices.
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The post Condo Sales Drop to Lowest in the Data, Supply Highest since Housing Bust. Single-Family Home Sales Below 1995, Supply Highest since 2016 appeared first on Energy News Beat.
