the current state of the housing market; Overview mid-January

by calculated risks 1/12/2023 10:19:00 AM

Today, in the Calculated Real Estate Newsletter: The Current State of the Housing Market; Overview mid-January

Brief excerpt:

Here’s a graph that compares the annual change in average NAR prices against the national Case-Shiller index (the average is distorted by the mix of homes sold, and it lags because this relates to closing prices).

The annual change in average price peaked at 25.2% in May 2021 and has now slowed to 3.5%. Overall, the average NAR price leads the Case-Shiller Index by two to three months. Note that the average price usually starts to decline seasonally in July, so the 2.1% drop in November in the average price was partly seasonal, however the 10.4% drop over the past five months was much larger than the typical seasonal decline.

The average price will probably drop year over year in a few months – and Case-Shiller will follow suit. I now expect a 10%+ drop in nominal home prices, see: House Prices: 7 Years in Agony.

On Friday, January 20, NAR will release existing home sales for the month of December. This report is likely to show another sharp decline in year-over-year sales for the month of December, similar to the year-over-year decline in November. … If national sales fell by the same percentage as last month, NAR would report December sales of less than SAAR 4.0 million – down from May 2020’s 4.01 million (pandemic decline) and the lowest sales rate since 2010.

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