19 are below their 2022 peaks: Austin -20%, San Francisco -10%, Phoenix -8%, San Antonio -7%, Denver -7%, Salt Lake City -6%, Sacramento -6%, Portland -5%, Dallas -5%, Seattle -5%, Honolulu -4%…
The mix that drives the housing market now: Lowest demand since 1995 and surging supply of existing homes, as buyers are on strike because prices are too high. Active listings have been surging all year in just about every major market, including in formerly hot markets such as Florida and in Texas where they reached the highest level since at least 2016. In addition, since the first rate cut, mortgage rates have risen back to around 7%.
Homebuilders have been taking market share from sales of existing homes by lowering their price points, buying down mortgage rates, and throwing incentives into the mix, to where payments on a new house are below payments on an equivalent existing house. And facing ballooning inventories of unsold houses, they continue to aggressively price their inventory and motivate buyers with big incentives. They’re making deals and are absorbing demand that would have gone to existing home sellers, and their sales have held up.
And renting has become a far cheaper solution than buying in recent years, after the spike in prices and the surge in mortgage rates, homeowners’ insurance, property taxes, and maintenance expenses. More and more people who could buy are renting, or are planning to rent when they move the next time; they’re profiting from an arbitrage between two similar products with very different prices, in some metros saving thousands of dollars a month by renting an equivalent home. And this too contributes to the large-scale decline in demand in the purchase market.