The U.S. housing market in November showcased a complex picture of slowing sales and increasing inventory, marking the fourth year of suppressed demand in the resale sector following a period of rapid price escalation. While national median prices demonstrated a degree of stability, underlying trends in sales volumes for both single-family homes and condominiums pointed to a continued cooling, with significant variations observed across different geographical regions.
This period reflects a market attempting to find equilibrium after the tumultuous price surges between mid-2020 and mid-2022. The extended decline in sales activity, coupled with a notable rise in available housing stock, suggests an evolving landscape for prospective buyers and sellers. Regional divergences in price movements further complicate the national narrative, emphasizing the localized nature of real estate dynamics.
Slowdown in Existing Home Sales Continues
Existing home sales in November reflected a persistent downturn, with single-family home transactions marginally increasing by 0.8% from October on a seasonally adjusted basis. However, this slight monthly gain was overshadowed by a year-over-year decrease of 0.8% and a substantial 22% reduction compared to November 2019, indicating a prolonged period of demand destruction. Condominium and co-operative sales also experienced a decline, falling by 2.6% month-over-month and year-over-year, reaching an annual rate of 380,000 units. This sustained weakness in sales figures across both segments underscores a challenging environment for the resale housing market, struggling to regain momentum seen in pre-pandemic times.
The data from November highlights a continuing trend of suppressed activity in the market for existing homes, extending the period of reduced demand that began in the wake of significant price increases. Despite a minor seasonal uptick, the overall volume of single-family home sales remains considerably lower than both last year's figures and those from before the pandemic. This suggests a persistent shift in buyer behavior and market conditions. Similarly, the condominium and co-operative market mirrored this contraction, with a notable drop in sales on both a monthly and annual basis. Such comprehensive declines across different housing types indicate a widespread reluctance or inability of buyers to enter the market, potentially due to factors such as affordability or interest rates.
Increasing Supply and Stabilizing Prices
Amidst the declining sales, the supply of single-family homes adjusted seasonally to 4.0 months, representing the highest inventory level for any November since 2018. This increase in housing stock suggests a potential easing of market tightness, moving towards conditions that could be more favorable for buyers. While national median prices for existing single-family homes showed a slight year-over-year increase of 1.4%, reaching $391,700, this national stability masked considerable regional variations. For instance, the median price in Austin plummeted by 24% from its peak, whereas Milwaukee saw a robust 4.1% year-over-year gain. These contrasting regional performances indicate a fragmented housing market where local economic factors play a crucial role in price dynamics.
The expansion in the inventory of single-family residences to a 4.0-month supply signals a significant shift in market dynamics. This marks the highest level recorded for November in several years, suggesting that the era of severe housing shortages may be drawing to a close. A larger supply typically provides more options for potential purchasers and can temper price growth. Indeed, while the national median price for single-family homes experienced a modest year-over-year rise, this figure fails to capture the diverse realities of local markets. The dramatic price drop in areas like Austin, juxtaposed with solid appreciation in others such as Milwaukee, illustrates the highly localized nature of housing market trends. These regional disparities are likely influenced by specific economic conditions, employment growth, and population shifts within those areas.