September housing data has a mix of good and bad news for homebuyers banking on a seasonal cooling in the housing market.
The good news: The housing market is following a normal pattern of seasonal cooling, which it did not follow in 2020.
The bad news: This year’s wind-down has been less pronounced compared to historical norms.
Last year, pandemic shutdowns in spring caused homebuying activity to peak later in the summer and last longer into the fall. Year-over-year data shows that September home sales are down 5-8% from last year, but that says more about the abnormally busy 2020 fall market than it does about this year’s.
Due to the pandemic, 2020 data is unreliable for year-over-year comparisons. But the years prior provide a good baseline for measuring today’s market.
Compared to pre-pandemic years, the 2021 housing market peaked higher and is cooling at a much slower pace.
According to a RE/MAX National Housing Report, home sales and the median sales price dropped less from September-August 2021 than they did for the same time period for 2015-2019. Meanwhile, inventory declined more than it typically does in late summer-early fall.
|Housing Market Indicator||September-August 2021||September-August 2015-2019 average|
|Drop in home sales||7.0%||15.3%|
|Drop in median sales price||1.1%||3.4%|
|Drop in inventory||4.9%||2.3%|
Skewed year-over-year data shows September home sales down 4.2% from 2020, painting a picture of a slow 2021 market. However, before the pandemic home sales typically declined by 15.3% from August-September, but this year’s decline (7%) was less than half of the pre-pandemic norm. So although there were less sales than last year, this year’s market was significantly busier in September than a typical year.
This sustained demand coupled with low inventory kept prices from falling as much as they normally would in September. Inventory declined by more than twice the typical pre-pandemic rate and the median sales price dropped by a third of its normal rate from August to September.
In the report, RE/MAX President Nick Bailey said that next to 2020 — “which was an outlier in many ways” — this was the second-most active September in 14 years.
“Affordability remains a challenge in most metros, where tight inventory continues to push prices,” Bailey said. “Homebuilders are trying to fill the gap – especially with multi-family home construction – but many of them are held up by shortages in labor and materials. That said, the market’s still active – just not quite at the pace we saw earlier this year.”