The number of EXISTING home sales continue to decrease as both home prices and mortgage rates increased but there is also due to a very low inventory of homes for sale. The home sales spike during COVID and record low mortgage rates brought forward demand. Those buyers have purchased a home and have reduced current period demand.
Existing homes for sale have a seasonal pattern with December being the low for the year.
Homes for sale have been drifting down since 2011 and reached a low as COVID diminished and mortgage rates were at record low levels prior to the Fed increasing interest rates in April 2022 in response to rising inflationary fears..
Existing Home—Months of Inventory remain near record lows but have started to increase.
Pending Home Sales Index has materially decreased over the past 9 months—initially due to lack of homes for sale AND now rising mortgage rates and home prices.
Prior to COVID, the Days on Market (DOM is the blue line) had been gradually decreasing. After COVID the days on market reached record lows and is now 21 Days as of October 2022.
64% of all properties sell in ONE MONTH (red line)
Mortgage rates are now well above 5.00% (red bars) and it is anticipated that this will have a dampening effect on home sales. (blue line). The rate increases in April-Oct will impact November+ closings.
Home prices are the dashed green line and even with mortgage rates rising, home prices rose. This has occurred in the past when rates rose—-future near term home buyers rushed into the market to buy before mortgage rates rose further. Now that they are gone, home prices have declined.
Bill Knudson, Research Analyst Landco ARESC