Existing Home Sales Fall To Lowest Levels in 10 Years
Sarasota/Manatee County Home Prices Scott Norris January 23, 2024
Sarasota/Manatee County Home Prices Scott Norris January 23, 2024
The source of all data is Stellar MLS for the property type and period described. New Construction includes listings that are marked as such in Stellar MLS. Existing Homes or Resales are used to describe all listings are not New Construction. Days on Market is a statistic that measures the number of days between the listing date and the date the listing goes to contract (the PENDING date in Stellar MLS). The term inventory means the number of homes on the market (same as the number of homes marked as ACTIVE status in Stellar MLS). A SALE occurs on the date of the closing, which for resales is usually 30-60 days after the pending date but can vary wildly from this). The terms Sales and Closings are interchangeable.
Just looking at the top line sales figure, things look fairly good. Total unit sales increased by 2% over last year. However, if not for the record smashing year in new construction closings, things would have looked much different. New construction sales accounted for 4,120 unit sales or 19% of all sales. Over the past 10 years at least, 2023 was the biggest year by a huge margin for new construction closings both in terms of unit sales and percentage of total sales.
In fact, new construction sales masked a huge slowdown in the sales of existing homes which nosedived to the lowest level in at least 10 years. After rising 11% and 16% in 2020 and 2021, existing home sales fell 25% in 2022 and another 13% in 2023 to only 15,908 sales. This is not great news for people looking to sell a home, but not the worst.
The worst part of the story is that existing home inventory levels started this year 75% higher than last year. More inventory and less sales means that buyers will have many more options than last year, lengthening the marketing time and putting pressure on prices.
The final bit of bad news for home sellers also deals with new construction. Historically, there has always been a big price difference between new construction and existing home inventory. In 2015, the median sales price of a new construction home was 50% higher than an existing home. This spread has decreased every year since then, up to and including 2023 when the price difference all but disappeared. In 2023, the median sale price of a new construction home was only 3% higher than that of an existing home ($479k vs $465k).
If you can get a brand-new home (with lower insurance and maintenance costs) for about the same as one that is 50 years old, at least some if not many buyers will go the route of new construction, sucking sales out of exiting homes.
There are certainly other differences between new construction and resales but price is always a big one, especially for seasonal buyers in a moderate price range.
If you compare inventory levels on January 1 across the past 5 years, the region is back to 2019 levels. Back then, the median asking price for a home (Existing Homes) on the market was $299,000. Today the median asking price is $514,000 or 72% higher. Alot has happened between then and now but 72% seems like a big number for the market to absorb in 5 years and still be flush with resale inventory as well as a larger, more competitively priced, new construction market. And then there is the fact that interest rates have more than doubled since then.
None of this is great news if you are trying to sell a home. It would seem like prices are likely to fall some and take longer to sell. However, there are likely to one or more mitigating factors that would provide support to prices, especially existing home prices. These would include:
1. The fact that there are still buyers sitting on the sideline now because they are priced out of the market. Any decrease in price will bring in more buyers.
2. The rumored Fed interest rate cuts which could start in March.
3. A slowdown in new construction closings. I think part of the big new construction sales this year was a big bubble that had been working through the system ever due to the supply shortages 18 months ago.
Sarasota/Manatee County Home Prices
Sales Levels at New Low
Sarasota/Manatee County Home Prices
New Construction Sales hit 10 Year High
Sarasota/Manatee County Home Prices
Median Sales Price down 3% vs September 2022
Sarasota/Manatee County Home Prices
Up 5% SInce Beginning of Year
Starting in July 2021, year-over-year monthly sales turn negative due figures spurred by the pandemic.
If 2021 and 2022 had never happened, this would have been considered a great month.
An increase in the number of expired listings is a sign that actual home values are less than expectations.
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