Suddenly, Here’s the Inventory: Homes Listed for Sale Jump Amid Price Cuts and Falling Sales
Fictitious inventory is emerging with perfect timing, just as St. Moly mortgage rates and sky-high prices keep buyers away.
By Wolf Richter for WOLF STREET.
“Inventory” in Homes means Homes offered for sale. Then there’s phantom inventory – vacant homes that owners want to sell eventually because they’ve already moved into a new place but want to drive the price of the homes all the way up, then at the top they’ll sell it. to maximize their profits.
We’ve seen it over the last 18 months when house prices have skyrocketed: people have bought one house and moved into it, and they’ve moved out of their other house, but haven’t sold it, expecting a 10%, 20% or 30% price gain. on a leveraged bet with a much larger payoff on equity. The math makes sense, even if it doesn’t always work out, and now it’s starting to be time to put those vacant homes on the market, and here they are, just as home sales are dropping because layers and layers of Buyers have been squeezed out of the market by rising mortgage rates and exorbitant prices.
Active registrations jumped. In May, the inventory of homes actively for sale jumped 26% from April and is suddenly up 8% from a year ago, the first year-over-year increase since June 2019, according to the National Association of Realtors today. There were about 38,000 more homes for sale in May than a year ago (data via realtor.com):
The strategy of not putting the old house on the market after the move had the effect of creating record inventory for sale, and inventory remains low, but that is changing now, and very suddenly.
Active listings jumped for two reasons:
One, sales down, as potential buyers left the market due to sky-high house prices and Holy-Moly mortgage rates. The NAR “pending listings” metric for May, which tracks listings that are at various stages of the sales process but before the deal closes, fell 12.6% year-over-year in May, following the 8.7% decline in April, the ninth consecutive month of year-over-year declines:
Reported later in the month, closed sales also fell for the ninth straight month, and closed sales data for May is expected to be another doozie.
And second, the sudden number of new registrations in May. New listings jumped 10% in May from April and are now up 6.3% from May last year, the second straight month of year-over-year increases, after April at 1.3% year-over-year. The 541,000 homes newly listed for sale in May represented the highest number of new listings since June 2019.
Price cuts jumped 74% in May compared to April, and 69% compared to May last year, in a sudden and massive reversal from the very low levels of last year and the beginning of this year:
Huge differences between the 50 largest metros.
Among the 48 largest metros (data for Oklahoma City and Hartford were excluded due to “data inconsistencies,” according to the NAR), active listings in May jumped the most in a year on the other in Austin (+85.8% from May last year); and fell the most in Miami (-32.1% from May last year).
Of the 48 metros, active listings have only dropped in six of them, as owners apparently haven’t received the memo yet.
Among the 48 metropolises, active listings jumped double digits year-on-year in half of them (24).
The table is sorted by percent year-over-year change in active listings:
|Métro, registrations in May 2022
||Active enrollments, % change year over year||New registrations, % change year over year|
|Austin-Round Rock, Texas||85.8%||19.1%|
|Riverside-San Bernardino-Ontario, California.||51.6%||6.3%|
|San Antonio-New Braunfels, Texas||44.1%||9.5%|
|Raleigh, North Carolina||41.6%||27.9%|
|Tampa-St. Petersburg-Clearwater, Florida.||35.5%||11.2%|
|Dallas-Fort Worth-Arlington, TX||34.4%||18.0%|
|San Francisco-Oakland-Hayward, CA.||32.5%||2.5%|
|Kansas City, Mo.-Kan.||24.4%||-2.5%|
|San Jose-Sunnyvale-Santa Clara, CA.||22.9%||3.2%|
|Louisville/Jefferson County, Ky.-Ind.||19.1%||-1.3%|
|Las Vegas-Henderson-Paradise, Nevada.||18.6%||20.7%|
|Atlanta-Sandy Springs-Roswell, Ga.||10.6%||2.2%|
|San Diego-Carlsbad, California.||9.8%||-6.9%|
|New Orleans-Metairie, La.||8.6%||-2.6%|
|Buffalo-Cheektowaga-Niagara Falls, NY||6.6%||1.0%|
|Los Angeles-Long Beach-Anaheim, CA.||5.1%||-3.4%|
|St. Louis, Mo.-Ill.||4.4%||-2.1%|
|Houston-The Woodlands-Sugar Land, Texas||4.3%||4.5%|
|Minneapolis-St. Paul-Bloomington, Minn.-Wis.||2.4%||-0.7%|
|Washington-Arlington-Alexandria, DC-Va.-Md.-W. Virginia.||1.5%||-5.5%|
|Milwaukee-Waukesha-West Allis, Wisconsin.||0.7%||-5.3%|
|New York-Newark-Jersey City, NY-NJ-Pa.||-0.8%||0.8%|
|Virginia Beach-Norfolk-Newport News, Virginia-NC||-19.3%||-15.1%|
|Miami-Fort Lauderdale-West Palm Beach, Florida.||-32.1%||-0.4%|
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