Evidence continues to accumulate.
By Wolf Richter for WOLF STREET.
Sales of new single-family homes (based on signed contracts) increased 6.9% in June, compared to June last year, at a seasonally adjusted annual sales rate of 776,000 homes, according to the Commerce Department this morning. It was a hair above 774,000 in January, as it recovered the entire drop during February, March and April, making it the highest sales rate since July 2007:
It may be another tidbit in the larger saga of potential changes in the real estate market that were activated or accelerated during the Pandemic: a change from condominiums to houses, and particularly a change from condominiums in large 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 change from condominium to houses in sales of existing houses.
The National Association of Real Estate Agents reported two days ago that existing condo sales in June (based on closed sales), while also bouncing off closing lows, remained 23% below June last year, with a considerable offer of 5.3 months. Conversely, existing home sales decreased only 9% from June last year, with a tighter supply of 3.8 months.
And existing home prices show a similar divergence. The median price for single-family homes increased 3.5% nationally, but the median price for condos increased just 1.4%, according to the NAR.
In large urban areas, trends may be more pronounced. For example, in the San Francisco Bay Area, condo sales in the largest urban counties fell 16% to 34% in June compared to June last year, according to the Association of Realtors of California.
And the median price of condos in those counties fell, and in some of them:
- Santa Clara (San José, south of Silicon Valley): -10.9%
- San Mateo (northern part of Silicon Valley): -7.8%
- San Francisco: -6.6%
- Against Costa: -4.8%
- Alameda: -1.5%
Despite the fact that condominiums were affected by sales and price pressures, single-family home sales in the Bay Area overall decreased only 7.8% in June year-over-year, and the median price rose 4.2%
Something is happening, of which we can see the first glimpses.
Go back to new houses.
The median price for new homes, as volatile as it is with big declines and monthly rebounds, has been in the same range since 2016. The peak occurred in late 2017. In June, the median price rebounded above the bump . in May and April, at $ 329,200, 5.6% more than in June last year:
The number of unsold new homes, these are specialty homes, decreased to 307,000 seasonally adjusted homes, the lowest since May 2018.
Given the increase in sales in June, supply at that sales rate fell to 4.7 months, at the low end of the multi-year range:
I’m still waiting to see if this shift from condos to houses and from urban centers to suburbs is the early phase of a long-term trend in line with the shift to demographic and work-from-home dynamics, or just a knee. -Jerk reaction to the pandemic that will explode and reverse in a few months.
If it becomes a long-term trend, it will have major implications for the real estate sector and for the structure of cities.
But wait … there is always the reaction: lower the prices of these condos in the big cities, and the buyers will come.
More signs of a move from cities to suburbs? The supply of existing houses is scarce; condos are piling up. Read… Home sales were down -11% from the previous year, condos -23%, but rebounded on lockout lows
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