The evidence is mounting.
By Wolf Richter for WOLF STREET.
Sales of new single-family homes (based on signed contracts) increased 6.9% in June, compared with June of last year, to a seasonally adjusted annual sales rate of 776,000 homes, according to the Department of Trade this morning. It was a hair above January’s 774,000, having recovered all the plunge in February, March and April – making it the highest sales rate since July 2007:
It may be another tidbit in the larger saga of potential housing market changes that were triggered or accelerated during the pandemic: a shift from condos to homes, and in particular a shift from condos to larger ones. urban centers to houses in the suburbs. and a focus on new homes, perhaps motivated by the issues and complexities surrounding viewing and purchasing an existing home from an owner during the pandemic.
The move from condo to home in existing home sales.
The National Association of Realtors reported two days ago that sales of existing condos in June (based on closed sales), although they also rebounded from foreclosure lows, remained down 23% per year. compared to June of last year, with a supply of 5.3 months. In contrast, sales of existing homes fell only 9% from June last year, with a tighter supply of 3.8 months.
And the prices of existing homes show a similar divergence. The median price of single-family homes rose 3.5% nationwide, but the median price of condominium apartments rose only 1.4%, according to the NAR.
In large urban areas, the trends may be more pronounced. For example, in the San Francisco Bay Area, condo sales in the larger, more urban counties fell 16-34% in June compared to June of last year, according to the California Association of Realtors. .
And the median price of condos in these counties has fallen, and sharply in some of them:
- Santa Clara (San Jose, partie sud of the Silicon Valley): -10.9%
- San Mateo (partie nord de la Silicon Valley): -7.8%
- San Francisco: -6.6%
- Against Costa: -4.8%
- Alameda: -1,5%
Even though condominium apartments have come under pressure on sales and prices, sales of single-family homes in the Bay Area overall only declined by 7.8% in June year-over-year, and the median price Rose 4,2%.
Something is happening, of which we have the first glimpses.
Back to the new homes.
The median new home price, volatile as it is with large monthly declines and rebounds, has remained in the same range since 2016. The highest was at the end of 2017. In June, the price median rebounded after taking in May and April, to $ 329,200, up 5.6% from June last year:
The number of new unsold homes – these are special homes – declined to 307,000 homes, seasonally adjusted, the lowest since May 2018.
Given the increase in sales in June, the supply at this sales pace fell to 4.7 months, at the bottom of the multi-year range:
I’m still waiting to see if this shift from condos to homes and from urban centers to the suburbs is the early phase of a long term trend in line with the shift to work from home and demographic dynamics, or just a knee – Sudden reaction to the pandemic which will explode and reverse in a few months.
If this turns into a long-term trend, it will have big implications for real estate and for the structure of cities.
But wait… there is always the reaction: Lower the prices of these big city condos enough, and the buyers will come.
More signs of moving from cities to suburbs? The supply of existing homes is limited; the condos are piling up. Lily… Home sales down -11% from last year, apartments -23%, but rebounding
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