December 7, 2023

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Housing Bubble Getting Ready to Pop: Pending Sales Plunge in June, Inventory Jumps, Price Reductions Spike amid Holy-Moly Mortgage Rates

Pent-up supply suddenly shows up – those vacant homes that no one was counting as vacant.

By Wolf Richter for WOLF STREET.

For the last two years, the story was that there’s no inventory for sale, that there was a housing shortage, and that’s why prices were skyrocketing. Then there were other folks like me that pointed out over and over again that people weren’t putting their old homes on the market after they’d bought a new home, and that these people now owned two or three homes and that they were going to ride up the hottest real estate market ever where prices soared 20% or 30% or more per year, and then they’d sell those vacant homes which no one had ever counted as vacant.

And because they already lived in a home, they could sell their vacant homes without having to buy another home. This is the “shadow inventory” that is now coming on the market, just when mortgage rates have spiked, and sales are plunging. And to get things moving, price reductions are spiking.

Pent-up supply, plunging sales: it’s just the beginning, but it is happening.

Active listings jumped in June by 20% from May, and by 19% from a year ago, the second year-over-year increase in a row, after an 8% jump in May, and both were the first year-over-year increases since June 2019. There were about 98,000 more homes listed for sale in June than a year ago, according to data from the National Association of Realtors today (data at

Active listings jumped for two reasons:

ONE, pending sales in June plunged by 16% year-over-year, after the 12% drop in May, and the 9% drop in April, as potential buyers lost interest in sky-high home prices and holy-moly mortgage rates. These are listings in various stages of the sales process, but before the deal closes. June was the 10th month in a row of year-over-year declines. Back in June, the NAR had reported that “closed” sales in May also dropped for the 10th month in a row. And this doesn’t bode well for closed sales in June:

TWO, new listings rose in June to 562,000 homes, the second highest June in recent years, behind only June 2019. And interestingly, new listings rose in June, when in normal years they peaked in May and dropped in June. I circled the prior Junes (data via

Price reductions spiked by 50% in June from May and about doubled year-over-year, as sellers are trying to get buyers to show up and take a look as foot traffic has dropped and bidding wars have receded into fond memories. This is a sudden reset. But more sellers are coming to grips with a new reality: Prices have to go where the buyers are, and buyers are around somewhere, but they’re a lot lower (data via

Holy-moly mortgage rates – so called because that’s what people utter between their teeth when they first see the mortgage payment for a home they want to buy – are hovering around 6% for a 30-year fixed rate mortgage, roughly double of where they’d been in 2020 (data via

This type of mortgage rate, having doubled from not too long ago, and home prices that have spiked by 40% or more over the same two-year period make for a toxic mix. Something has to give, and it’s not going to be the buyers – because they can’t, they’re boxed in – but the sellers. Or there is no deal.

And buyers who could buy, the infamous cash buyers, they don’t want to buy at those prices either, now that the craziness is hissing out of the market. No one wants to overpay at the insane peak of what was a totally crazy market.

Huge difference in listings among the 50 largest metros.

Among the largest 50 metros, the number of active listings in June spiked the most in Austin (+144% year-over-year), Phoenix (+113%), and Raleigh (112%). In 31 other metros, active listings surged by the double-digits. And active listings fell in only a handful of metros, led by Chicago (-13%), Virginia Beach (-14%), and Miami (-16%).

The table is sorted by the year-over-year percent change of active listings (data via

Largest Metros, Active Listings, June 2022 % Change YoY
Austin-Round Rock, TX 144%
Phoenix-Mesa-Scottsdale, AZ 113%
Raleigh, NC 112%
Salt Lake City, UT 98%
Nashville-Davidson–Murfreesboro–Franklin, TN 86%
Riverside-San Bernardino-Ontario, CA 72%
Seattle-Tacoma-Bellevue, WA 66%
Sacramento–Roseville–Arden-Arcade, CA 65%
Dallas-Fort Worth-Arlington, TX 62%
Denver-Aurora-Lakewood, CO 58%
Tampa-St. Petersburg-Clearwater, FL 56%
Tucson, AZ 55%
San Antonio-New Braunfels, TX 54%
San Francisco-Oakland-Hayward, CA 46%
Las Vegas-Henderson-Paradise, NV 45%
Jacksonville, FL 38%
Oklahoma City, OK 37%
Charlotte-Concord-Gastonia, NC-SC 37%
San Jose-Sunnyvale-Santa Clara, CA 34%
Memphis, Tenn.-MS-AR 33%
Orlando-Kissimmee-Sanford, FL 31%
Portland-Vancouver-Hillsboro, OR-WA 31%
Kansas City, MO 28%
Birmingham-Hoover, AL 26%
San Diego-Carlsbad, CA 25%
Atlanta-Sandy Springs-Roswell, GA 23%
Indianapolis-Carmel-Anderson, IN 22%
Louisville/Jefferson County, KY-IN 22%
Los Angeles-Long Beach-Anaheim, CA 20%
Detroit-Warren-Dearborn, MI 18%
New Orleans-Metairie, LA 16%
Buffalo-Cheektowaga-Niagara Falls, NY 13%
Columbus, OH 12%
Houston-The Woodlands-Sugar Land, TX 10%
Providence-Warwick, RI-MA 6%
St. Louis, MO-IL 5%
Cincinnati, OH-KY-IN 5%
Pittsburgh, PA 4%
Washington-Arlington-Alexandria, DC-VA-MD-WV 2%
Baltimore-Columbia-Towson, MD 1%
Boston-Cambridge-Newton, MA-NH 0%
New York-Newark-Jersey City, NY-NJ-PA 0%
Minneapolis-St. Paul-Bloomington, MN-WI 0%
Cleveland-Elyria, OH -2%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD -2%
Rochester, NY -4%
Milwaukee-Waukesha-West Allis, WI -4%
Richmond, VA -6%
Chicago-Naperville-Elgin, IL-IN-WI -13%
Virginia Beach-Norfolk-Newport News, VA-NC -14%
Miami-Fort Lauderdale-West Palm Beach, FL -16%


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