Home Sales Fell In September As Fewer Listings Hit The Market

Fewer homes hit the market in September, constraining the red-hot housing market amidst the fourteenth straight month of double-digit price gains.

A new report from Redfin shows that while median home sale prices increased 14% year-over-year to $376,800 in September, closed home sales and new listings both fell from a year earlier, by 5% and 9% respectively. And that translates into sour grapes for would-be buyers in virtually all of the markets Redfin tracks.

“The severe lack of inventory is restricting home sales,” said Redfin Chief Economist Daryl Fairweather. “Even though plenty of people bought homes last year, many homebuyers waited while the pandemic went from bad to worse and remote-work policies were finalized. The homebuyers who are just beginning their search are finding that the well has run dry. But I am hopeful that as it becomes easier to get building materials, we will finally have a strong year for new construction in 2022. That’s what the market needs more than anything.”

Median sale prices were up over September 2020 levels in all but one of the 85 biggest metros Redfin tracks: Bridgeport, Conn. (down 2.2% year-over-year), which had been flooded with buyers looking to leave New York City in the midst of the pandemic. The biggest price increases last month were in North Port, Fla. (+30%), Salt Lake City (+28%) and Austin (+27%).

Meanwhile, seasonally-adjusted home sales decreased 5% in September from a year earlier, the second annual decline in 16 months, Redfin experts say. Home sales fell in 66 of the 85 largest metro areas the firm tracks, with the biggest sales declines in New Orleans (-42%), Bridgeport, Conn. (-24%) and Salt Lake City (-23%). The largest gains were in New York City (+26%), Honolulu (+24%) and San Jose (+15%).

Seasonally adjusted active listings also fell 19% year over year in September.

“Measures of housing market competition based on completed home sales eased further in September,” Fairweather notes. “The typical home that sold in September went under contract in 18 days—more than a week faster than a year earlier, when homes sold in a median 29 days, but up three days from the record low in June.”

As competition for homes heats up coast to coast, three metros that were hit hardest by the housing collapse are now among the top 10 most overvalued housing markets. Homes in Phoenix, Las Vegas and Stockton, California are all trading at a premium of at least 38% above their long-term pricing trend, according to a recent analysis by professors at Florida Atlantic University and Florida International University.

“In the Top 10 markets, potential buyers might want to consider renting and reinvesting money that they otherwise would have put into homeownership,” says Ken H. Johnson, a real estate economist and associate dean in FAU’s College of Business. “Renting and reinvesting has been shown to often outperform ownership in terms of wealth creation.”