October Stats: This Doesn't Make Sense

by Dave Christie

The purpose of these monthly stat posts is to spot trends, diagnose what's happening in the market, and make educated guesses about what that might mean in future. That's becoming more difficult lately.

Three charts tell the tale. They all are based on 12 months worth of numbers, to take any seasonal swings out of the equation. Let's start with supply - the number of homes for sale in Orleans Parish.

We've bounced out of our historic inventory shortage and now are in what I consider to be "normal" territory. (By the way, squeezing 10 years into this small screen exaggerates the amplitude of the swings, but I digress.)

Next, we go to the demand side. The number of closed sales tells us how many buyers are actively in the market and buying homes, as opposed to just window shopping.

We've droppoed to the lowest number of sold homes in 11 years. Demand is way down, supply is back up to average levels, that must mean that prices are dropping.

But they're not. Prices are holding steady - almost exactly where they were in February of 2022. The only possible explanation I have for this anomoly is median price statistics lag a couple of months behind where we are now. A house that closed in October typically went under contract in September or even August.

Prices have to start reflecting the reality of the market soon. In October we had 8 months worth of homes on the market. Anything over 6 months reflects a buyer's market. The number of pending sales in October was down 9.3% from last year, and down 42% from 2021. Expect to see the median prices to fall gradually until mortgage rates improve.