- by New Deal democrat
Although they constitute about 90% of all housing sales, I don’t pay too much attention to existing sales because they are not nearly so important as new home sales, since the latter involve much more economic activity in the building process, plus more landscaping and furnishings.
As I’ll show below, what has been happening with prices and inventory is more interesting than what has been happening with sales themselves, which have been rangebound between 3.85 million annualized to 4.35 million for the past three years.
And rangebound they remained in April, with a 5,000 annualized monthly increase to 4.02 million. This is also only 0.5% higher compared with one year ago:
Although I’m not showing the 10 year graph this month, the current range is well below the pre-COVID average of roughly 5.5 million annualized sales.
As noted above, the more interesting trend is in prices. These are not seasonally adjusted, so the only good way to look at them is YoY. So measured, they were only up 0.9%:
This is consistent with the near record low YoY increases (outside of the Housing Bust) in the Case-Shiller and FHFA repeat home sales indexes, and the slight YoY decline in new home prices as developers downsize to meet the market.
But in order to bring the housing market back into the equilibrium it was in prior to the pandemic, inventory has to increase, and increase substantially. There the progress is glacial, as existing home inventory was up only 1.4% YoY to 1.47 million:
Meanwhile, similar to the sideways trend in prices in both the FHFA and Case Shiller repeat sales indexes, on a YoY basis prices were only up 1.4%. As the below 10 year graph shows, inventory has mainly recovered from its post-COVID lows, it is still only about 80% of what it was in the several years before 2020.
The past few months have indicated that the housing market has reached a post-COVID equilibrium, with sideways sales and prices, and slowly increasing inventory. Unfortunately, the US needs much more housing to be built in order for it to be as affordable as it was before (actually, several decades before) COVID.
