Home Sales Posted Largest Monthly Decline Since Pandemic

Fewer homes than ever were for sale nationally in December, driving seasonally-adjusted home sales down 3.6%, according to real estate brokerage Redfin’s home sales report.

This marks the largest month-over-month sales decline since May 2020. Home prices surged 15% from a year earlier, the 17th consecutive month of double-digit increases.

However, the wild housing market did not take a break for the holidays in some markets, according to the report.

For example, in San Francisco, there was one two-bedroom home in Orinda that was listed just before Christmas and 40 people immediately came to the open houses. It ended up getting multiple offers and going for $325,000 over the $1.2 million asking price.

YoY Median Sale Prices Mostly Increased

Median sale prices increased from a year earlier in all but one of the 88 largest metro areas Redfin tracks. The only metro area with a decrease was Bridgeport, Conn., where home prices fell 0.4% from a year earlier following a 28% year-over-year increase in December 2020. The largest price increases were in Austin (+30%), North Port, Fla. (+28%) and Phoenix (+28%).

Seasonally-adjusted home sales in December were down 3.6% from a month earlier and 11% from a year earlier, the largest annual decline since June 2020. Home sales fell from the prior year in 79 of the 88 largest metro areas Redfin tracks. The biggest sales declines were seen in Nassau County, N.Y. (-22%), New Brunswick, N.J. (-22%) and Albany, N.Y. (-21%). The largest gains were in Greenville, S.C. (+9%), Greensboro, N.C. (+8%) and Baton Rouge, La. (+7%).

Only one of the 88 largest metros tracked by Redfin posted a year-over-year increase in the number of seasonally adjusted active listings of homes for sale: Detroit, MI (+4%). The biggest year-over-year declines in active housing supply in December were in Baton Rouge, La. (-52%), San Jose (-49%) and San Francisco (-46%).

Seasonally adjusted new listings of homes for sale were down 13% in December from a year earlier, the largest decline since May 2020. New listings fell from a year ago in 82 of the 88 largest metro areas.

Home Under Contract in Average of 24 Days

The typical home that sold in December went under contract in 24 days—a week faster than a year earlier, when homes sold in a median 31 days, but up nine days from the record low of 15 days in June.

In December, 43% of homes sold above list price, down 14 percentage points from the record high in June, but up 9 percentage points from a year earlier. The average sale-to-list price ratio in December was 100.5%, down from a record high of 102.6% in June but up from 99.4% a year earlier.

Supply-Demand Imbalance Causing Skyrocketing Prices

Mark Fogel, President & CEO of commercial real estate middle-market lender ACRES Capital, tells GlobeSt.com that a dearth of supply and a considerable increase in the price of single-family homes has contributed to a new low in home sales across in-demand markets. “This coincides with growing multifamily housing demand and rents trending upward nationwide. We expect this will continue to put pressure on renters and owners alike in 2022.”

Low inventory is a problem despite new construction, Jonathan Kanarek, managing director, BuildFax, a Verisk business, tells GlobeSt.com.

Even worse, “We’re also beginning to see new construction growth plateau as homebuilders face headwinds from supply-chain disruptions, labor shortages, and expensive building materials,” Kanarek said. 

The low inventory has helped create a feedback loop in which owners are reluctant to sell for fear of not finding a suitable and affordable replacement property—and that’s despite record-low interest rates, Rob Finlay, CEO at Thirty Capital, tells GlobeSt.com.