After a gloomy report of new home sales that I covered yesterday, today’s report of existing home sales is continuing the trend:

  1. Inventories are at 6.5 months supply, a 9 year record
  2. The inventory growth is accelerating. If we compare with last September, sales are 7% down, or on track for 12% y/y decline. But if we compare with March, sales are on track for 20% decline
  3. Existing home sales indicator is trailing new homes by 1-2 months, so it is much worse now than the numbers tell

In short, there is a emerging fight between home builders and private sellers. While builders are demonstrating the readiness to drop the price at the yearly rate of 20% or more, if you count free golf club memberships coming with many new homes, stubborn private sellers are so full in debt that they just can’t afford to take the loss and instead are just hanging on the market until it will become evident that this price just can’t stand against last year highs.

Anecdotally, I can confirm that in my area home prices are down by over 5% from last year. After the 50% appreciation in the 3 crazy years anything decent was priced at $800k and over and was selling fast. Now, there are amazing homes for $700k and nobody wants them.

Remember, the statistics shows only deals done 3 months ago. The huge discounts you see for sale now are just not accounted.