Resale Housing Market Finding a New Normal
Year-to-date closed sales are down 18 percent vs. 2021. Greater Sacramento home sales have cooled quite markedly compared to the red-hot wave of 2020 and 2021. The region will also most surely see a more typical seasonal softening of resale homes as we approach year-end. The 1,613 new open escrows reported in September were 21 percent lighter than August and a hefty 36 percent lower than September of last year. New open escrows for the entire third quarter also reflected a 30 percent decrease versus those of 2021. All of these trends over the past few months indicate that a rate of sales more reflective of the pre-COVID years is most likely here to stay.
The rate of new sales for the quarter actually remained quite reasonable based upon historical standards and still left the market with only 2.5 months of re-sale housing supply available at month-end. For a pre-pandemic comparison, there were 2.5 months of inventory available based upon the rate of sales in September of 2019. New listings entering the market in the third quarter were down 18 percent compared to last year and this shortfall has kept the market quite balanced for the time being.
The current market balance has also prevented a precipitous fall in prices. The average closed sales price of $670,000 and median of $585,000 for the third quarter were both approximately 4 percent greater than last year at this time. The number of closed escrows posted in the third quarter were down 18 percent versus last year and are currently 18 percent lower year-to-date, as of October 13. Homes that closed escrow in the third quarter were on the market an average of 29 days versus 16 last year and received approximately 96 percent of the original list price versus 102 in the same time frame. The third quarter days on the market and percentage of original list price metrics were actually quite similar to 2019 figures.
All price points continue to experience big changes compared to the market ride enjoyed by home sellers over the prior two years. The upper-end market, however (homes priced above $1,000,000) holds some interesting highlights. While the inventory level year-to-date is more than 50 percent higher than last year, new pending sales are 4 percent greater year-over-year. Upper-end sold and closed properties year-to-date are currently 6 percent greater than last year at this time. The consistent momentum in new open escrows remains above what was normal in recent pre-pandemic years and could very well continue to produce solid closed sale results in the upper-end over the coming months.
“Did anyone really think that the market conditions created by incredibly low mortgage interest rates and the work from home movement were going to last forever?” says Pat Shea, president of Lyon Real Estate. “A market reversion or correction was inevitable. From a historical perspective, every aspect of our housing market continues to reflect that even with this re-calibration there is still a very healthy level of activity. Based upon the current rate of new open escrows and lower number of new listings entering the market, 2.5 months of supply remains somewhat modest. Analysts in years past typically considered 4 to 6 months the range regarded as balanced.”
This market information was presented by Lyon Real Estate based upon data provided by Trendgraphix Inc., a Sacramento-based reporting company.
About Lyon Real Estate
Lyon Real Estate is the leading independent real estate brokerage company in Greater Sacramento (Sacramento Business Journal). We are proud to be homegrown, privately owned, and internationally known. Lyon has served the area for over 75 years. Last year, the company closed a total of 6,039 transactions and $3.39 billion in sales volume. Lyon Real Estate has over 800 agents in 17 offices located throughout the region. The company is a member of the Leading Real Estate Companies of the World®, the largest network of premier locally branded firms, as well as LeadingRE’s Luxury Portfolio International® program. In addition to its real estate services, Lyon Real Estate offers RELO Direct, a global relocation program. Since 2015, the Lyon Cares Foundation has contributed more than $1,017,900 to local nonprofits.
About TrendGraphix, Inc.
TrendGraphix, Inc. is a real estate reporting company based in Sacramento that uses local Multiple Listing Service (MLS) data to provide highly-visual market statistical graphs to real estate brokers, agents, and MLS/Realtor associations across the country. TrendGraphix’s programs are currently used by tens of thousands of agents in more than 250 brokerages in 48 states. For more information about TrendGraphix, visit www.trendgraphix.com.