Source: Realtor.com —
If the housing market of just a year ago still seemed to be moving at quantum speed, today it’s more akin to an interminable traffic jam—with no exit ramps or HOV lanes in sight.
As higher mortgage rates have made buying a home ever more expensive, the pool of buyers who can afford to purchase real estate has dried up. Nationally, the number of existing-home sales plummeted 36% in November compared with a year earlier, according to a Realtor.com® analysis of CoreLogic data. (The data did not include sales of new-construction homes.) There were 395,000 sales in November 2021 compared with 251,000 one year later.
So home sales have declined by a third across the U.S. But where are they down the most? The data team at Realtor.com found the parts of the country with the steepest declines in transactions.
These were often the COVID-19 pandemic hot spots, particularly in the Sun Belt stretching from California to Florida where buyers flocked to over the Past few years and bid up prices to unthinkable heights. Newtonian laws of real estate ultimately prevailed: Markets that went way up ultimately fell back down to earth, hard.
Mortgage rates peaked at over 7% in late October and November—more than double what they were just a year earlier. Remarkably, that made the average monthly payment about 75% more expensive* than what it was a year ago. Buyers who needed a mortgage to purchase a home understandably balked, and sales dried up.
“This shows how sensitive buyers are to mortgage rates,” says Selma Hepp, chief economist for CoreLogic.
These drop-offs have followed in the wake of the homebuying frenzy that took place during the pandemic. The unique market conditions during that period—mortgage rates at record lows, people rushing to find larger abodes, pent-up demand, and an unprecedented number of workers with the ability to work from anywhere—created a huge surge in the housing market. More than 6 million homes were sold in 2021, the most since the run-up to the Great Recession.
“Everything is thrown out of whack because of the pandemic,” Hepp says, adding that data still being collected for transactions after November shows some signs of stabilization. “The rate of decline is shrinking, so I think we’re getting near a ‘bottom-out’ or at least an inflection point.”
Home prices have come down a little in some parts of the country, but they’re expected to remain high as there still aren’t enough homes for sale in much of the nation. The market has begun to bounce back, but the recent rise in mortgage rates could plunge it back into a freeze.
“It’s very uncertain right now,” says Hepp.
The list of metropolitan areas where existing-home resale transactions have declined the most was derived from CoreLogic sales data, comparing November 2022 with November 2021. Only one metro per state was included to ensure geographic diversity, and new construction was not tracked. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Los Angeles was excluded from the ranking due to data issues.
So where are home sales down the most?
1. Tucson, AZ
November 2021 sales: 2,248
November 2022 sales: 789
Year-over-year change: -64.9%
The biggest year-over-year decline is in Tucson, the second-largest metro in Arizona, about 90 minutes south of Phoenix. It’s a Sun Belt city that’s popular with buyers as it’s not as hot or as expensive as Phoenix .
The large year-over-year decline in November comes as the market went from a historic high point to a period of dramatic slowdown, says John Mijac, the managing broker at Long Realty Foothills in Tucson.
“These last three years are statistical outliers,” he says.
Mijac says he’s optimistic about the Tucson market. In the past few weeks, he’s seen an uptick in sales.
“There’s still some latent demand,” he says. “Listings priced right sell quickly, sometimes even with multiple offers.”
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