Detached sales bounced 47.5% year-over-year in September. The large increase comes off weak base effects, as September 2018 was the slowest year for detached home sales in over two decades. When we extrapolate further out, we can see that detached house sales this year were still 19% below the ten year average.
In essence, sales volumes are finally increasing after several years of sellers trying to hold out. Most seller needs to go through the psychological and emotional process of trying their initial listing price, before eventually reducing their price. This sometimes takes a year or two and requires changing Realtors multiple times before coming to the unfortunate conclusion that their house is worth as much as they had hoped. As we can see, sellers are taking lower prices with the MLS benchmark price of a detached home dropping 8.6% year-over-year.
However, not all sellers are capitulating and heading for the exits. In fact, new listings remain low. We are seeing more sellers pull their listing off the market out of frustration, and opting to wait it out for better times. In fact, the 12 month average for new listings has plummeted to lows even worse than the 2008 financial crisis.
This temporary suppression of new listings has helped keep overall months of inventory stable at 7.9 months and has kept prices from falling further. Will sellers be able to continue waiting for better days ?