The housing market’s diet was going so well

The housing market was getting in shape. It’s like the market was on a diet and we were starting to see results for the first half of the year. But then everything went downhill in recent months. It’s been an ice cream and hot pockets binge, so the ground we gained in health has basically been lost now. Let’s talk about it. And for non-locals, what’s happening in Sacramento typifies many locations, so I hope you pick up some ideas and language for talking about the trend. 

Skim quickly by topic or digest slowly.

NOTE: I’ll be pushing out an updated information sheet for appraisers soon due to appraisal forms being redesigned. Stay tuned.

UPCOMING SPEAKING GIGS:

11/18/26 SacState Econ Class
11/19/26 Appraiser webinar TBA
12/3/26 Made 4 More 
12/9/26 Dunnigan Realtors 
12/11/26 Prime Real Estate 
12/16/26 Gateway 
1/6/27 Windermere Sacramento (Q&A)
1/14/27 Sac Real Producers Event 
1/15/27 PCAR Rocklin
1/26/27 Residential Roundup
2/3/27 Scott Palmer Real Estate
5/6/27 PCAR Auburn
8/13/27 PCAR Rocklin

WE WERE UP BY 5%, BUT THEN….

There was some optimism during the first half of the year because local sales volume was up by 5%. I know that’s not much, but it was a step in the right direction. Yet, now the ground we gained during the first half of the year has basically been given back as volume has plummeted in recent months. Technically, sales volume is still up 1.5% through October for the year, but I expect November and December volume to be weak ahead, so I’m guessing we’ll end the year slightly lower than 2025. In other words, it’s like the diet was going so well, but then we fell of the health wagon. Have you been there in real life? Oh man, I have so many times. 

TWO STATS ARE SENSATIONAL, BUT OTHERS ARE BORING

Many stats are pretty tame right now because they look very similar to last year, but there are two standouts to talk about today. Check out the number of sales and monthly supply to see more sensational change. 

ENCOURAGEMENT DOESN’T FEEL SO GOOD

“This market is interesting.” I hear that so often today, and I think it’s code for, “The housing market sucks so bad.” When talking with an agent friend this week, he said this very thing. And he also said encouraging words don’t feel so good at the moment. Can you relate? Even though he knows it won’t always be like this, the struggle still exists at the moment. It’s sort of like raising kids. We know the teenage years aren’t going to last forever, so there is hope, but just because the future is going to be brighter ahead doesn’t mean it’s easy today. For my real estate friends, take heart, stay focused, have a plan, work the plan, and figure out how to find a vision for your life and business. You can’t control the market, but you can control your mindset and behavior. 

BUYERS ARE MISSING IN ACTION

O buyers, where art thou? We lost about 20% of the buyer pool in a very short period of time due to spiking mortgage rates in recent months. This is true locally and nationally, and it’s really starting to show up in the sales stats. Most counties have about 15%+ fewer closed sales this year compared to last year. Here’s a new visual. One county looks like it’s doing better than all others, but hold that thought. 

Here’s what new pending contracts look like. This is why I’m saying November and December closed sales are going to be lower. I’m not being negative. It’s just lower pendings in October will lead to lower sales in November and December. 

DON’T GET FOOLED BY PERCENTAGES

Sutter County has a whopping 13% more sales this October than last year, but we’re only talking about seven more sales. My advice? Take smaller counties with a grain of salt on a monthly basis, and don’t get sensational about percentages when represented by a smaller number. 

NEW CONSTRUCTION HAS TAKEN A BEATING

The new homes market has been hit hard lately as volume is down 30% over the past ninety days when compared to the previous year. This is why builders have been offering more concessions, and while builders don’t ever want to reduce the price, at some point that may be necessary. Here are the top ten locations for new construction last month. 

Here’s what the trend looks like as a meme. 

Check out the dramatic change in new sales from North State BIA stats (not based on MLS stats). We’re basically at 2016 levels. Yikes. New construction was glowing for years, but with more supply in the existing market now, the trend has changed. On a related note, let’s watch to see if Prop 37 passing in California will have any effect to draw buyers to new homes. 

THIS IS WHAT SELLERS NEED TO SEE

Sellers need to understand what low buyer demand looks like. It was the third lowest October of homes sales since 1999 in the Sacramento region (2023 was slightly lower and 2007 was about 10% lower). There were just over 1,400 sales though. How do you become one of those? Lower the price if the market requires. 

UNSOLICITED ADVICE FOR BUYERS & SELLERS

Buyers, you have more options, so continue to be patient, get the best possible deal the market will give you, and be realistic there is still solid competition for homes that check all the boxes (that are priced well). I keep hearing from many buyers that the quality of listings is still not great, so the search can feel frustrating even though there are technically more options. Sellers, price it right from the beginning, offer concessions if needed, don’t try to push the price in a softening market, and lower the price if the market requires.  

BUYERS GETTING MORE CONCESSIONS

48% of all sales in the Sacramento region had seller concessions in October per MLS data. Concessions had been pretty flat, but we’re starting to see the trend tick up over the past few months (not a shocker). This is good news for buyers. By the way, concessions are things like a credit for closing costs, credit for repairs, or buying down the rate. This is NOT agent compensation.

SUPPLY HAS GROWN NOTABLY

Monthly supply is now above three months in the region, and while that’s not historically massive, it’s been enough to help the market feel frothy with prices. Dorothy, we’re not in Kansas anymore (why did I just make a Wizard of Oz reference?). Remember, people often say that five months of supply is normal, and that could be true nationally, but it’s not true locally. 

Here’s what it feels like to work in real estate right now. 

Months of supply is the relationship between active listings and closed sales, so here’s what it looks like broken apart. Do you see the widening gap between active listings and sales? Yep, that’s why the market feels softer. 

DON’T MISS THE POSITIVE TREND

When supply grows, many people look at it as a negative, and I can understand that from a seller perspective. But this is a positive for buyers and affordability because it can put downward pressure on prices. In the real estate space, there tends to be a pervasive seller-oriented narrative that views increasing supply or lower prices as a threat, but let’s remember buyers here. The housing market is still really stuck, but it’s a good thing for affordability to see more supply. Bottom line. Ultimately, I’m still really aware that we aren’t seeing much growth in supply from new sellers though, so there is only so much the market can heal. 

HELLO THERE CASH BUYERS

The percentage of cash buyers has been slightly higher over the past three months. It’s not that more cash buyers have entered the market though. It’s more like there have been fewer financed buyers, and that’s caused the percentage of overall cash to be a bigger chunk of the market. Still, about 80% of transactions have been financed, so be careful about saying everything is cash. 

PLEASE DON’T SAY IT’S 2007 AGAIN

Too many people flippantly compare today’s housing market with 2007, but the stats today are nothing like back then (besides the number of closed sales only being 10% higher today). I don’t say this to sugarcoat the trend, but having about 12,000 more active listings back then is why the market crashed so hard so quickly.  

I also regularly hear things like, “Bro, today is the largest gap between supply and demand ever.” Friends, stats don’t support that narrative. 

LOW DEMAND IS WHY SUPPLY IS GROWING

Many counties have seen somewhere around a 30% increase in monthly supply from last year, and that’s a huge change, but it’s not really due to more sellers coming to the market (see below). This is more about the pile of active listings growing because buyers haven’t been getting into contract. Some people almost get offended when I say this, but let’s understand why supply is changing. Remember, supply can grow due to more sellers, but the pile of listings can also grow when demand softens. 

SELLERS ARE NOT RUSHING THE MARKET

The number of new listings was slightly lower than one year ago, and it really hasn’t grown in recent months. This tells us that it’s not all these new listings causing the pile of actives to increase. One of my biggest concerns about the housing market is a lack of new sellers participating. 

SLOWING ON TOP OF SEASONAL SLOWING

A good way to describe the trend right now is it’s slowing for the season, so there are normal seasonal vibes where demand tapers off, but it’s also experiencing some extra slowing on top of the normal stuff. 

WHAT ARE PRICES DOING? 

It takes a while for the trend to show up in the prices. Like I said a couple of weeks ago, closed prices are the caboose in the train of real estate data. In short, the price trend has been bouncing around depending on the county, but it’s basically been hovering pretty close to last year. So, on one hand we can say the trend feels a bit flat or down slightly, but on the other hand we expect to see more softness in coming months. Remember, in 2022 when rates spiked in the spring, it took until the fall to see a negative price reading. So, it just takes time for the price trend to catch up in the closed sales.

MORE LISTINGS NOT MAKING IT TO THE FINISH LINE

There has been an increase in the number of expired listings as well as canceled listings. This isn’t a shocker at all, but sellers need to read the room. What does it take to not become a statistic like this? 

DISTRESSED SALES ARE 1% OF THE MARKET

It’s not a distressed market, but we are seeing more distress. That’s a good way to describe the housing trend right now. I expect to see more short sales ahead too since prices have been so flat or down slightly in recent years. 

NOT EVERYTHING SELLS BELOW THE ASKING PRICE

About 26% of homes sold above their original list price last month (orange). Here’s a breakdown of how it looks visually. Check out how different we are from 2021 too. Crazy, right? Or maybe it was 2021 that was crazy. 

STATS FOR TWELVE LOCAL COUNTIES

Here are fresh stats for twelve local counties. My advice? Don’t be rigid about price stats especially since we are missing so many sales. When there isn’t as much data, the numbers can bounce around quite a bit depending on what is selling. 

Thanks for being here. I appreciate it. 

Question: What stands out to you most? What are you seeing happen with prices in the listings? Any other trends we should talk about?

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