A vacant 2 bed room 1 bath house in Mansfield Ohio does not help the family of 5 in San Francisco let alone Cleveland. Where the vacancy is and the “quality” so to speak matters a lot.
Additionally, some percentage of homes have to be vacant to allow someone to move into it. You will need to provide evidence that the vacancy rate of a specific market is causing prices to go higher. Citing national statistics when talking about a local issue does not help.
Look at my post immediately previous to yours. It links to a Lending Tree study that indicates an inverse relationship between vacancy rate and median home price. Hawaii is an obvious outlier, but interestingly, so is New Jersey. (What's going on in Jersey?) The data in this study is broken down by state; SMSA would probably be better, but I didn't spend a lot of time digging up data.
That data backs up what I am saying though. The national average means nothing, even state averages means nothing if where you are looking for housing, the vacancies are either not high enough to facilitate moving people around or are in conditions or floor plans that do not fit your needs. Not every vacant unit of housing is equally fungible.
California having one of the lowest vacancy rates and one of the highest median housing rates means there potentially needs to be a much higher rate of vacant units to lower housing prices if they are as inversely related as you describe.
If you trust the data (some of which comes from the 2020 census), it implies a nation-wide vacancy rate of 11.67%. Which was lower than I suspected, but higher than @falcolas' guess at 10%.
Also... I think I saw something go by indicating prices were still falling, at least in some markets.
Though that last one is a little confusing, citing data from the last three months in one section and data over 2 years in another. But it does (at least) make a nod towards explaining pricing in terms of supply and demand. I assert, and I think this is similar to @falcolas' point, that participation in the market by builders, foreign and domestic investors and banks has veered US house pricing noticeably away from true elasticity.
I do not damn builders for trying to increase their profits. We're a "wealth creation" economy, after all. But there does seem to be some conflict between stated national policy objectives of "affordable housing" and "profitable housing market." Alas, I bemoan the erosion of sensible policy-making in Washington. In the old days we would have just come out and said something like "we have affordable housing targets and will manipulate the market to achieve them." Now we're too spooked to say anything lest we upset the markets; or at least it seems.
Necessary for someone to move into that city, for one thing.
In practical terms, also necessary to facilitate the functioning of the market. Most homes are sold by living people (rather than by their estates). They can't sell their house without someplace else lined up to move into.
Ah. I thought we were talking about new homes, which are sold by builders (or the bank if the builder goes bust.) On the secondary market, opportunities for weirdness certainly exists. Investors buy older homes as well as new. And my sense is fewer people are looking to buy homes in this market with mortgage rates having gone up recently. I think people who don't HAVE to sell their homes are waiting it out until rates go down and they think they can get more for their home. I have no data to back that up, it's just anecdata from talking to a few realtors and noticing there are fewer homes listed on zillow in areas I've been looking at for the last several years.
Which is to say... I think there's less inventory than we would have seen had rates remained lower. But that's sort of unrelated to the issue of builders manipulating their rates of inventory creation (which I can't imagine they don't do, at least in response to macro-economic conditions.) The reason I think they should be treated differently is it takes a noticeable amount of time for a builder to build a house. First they have to negotiate financing and insurance, negotiate plans with the county, recruit a construction crew, etc. Home owners in the secondary market can respond to market conditions much faster.
They're not competing, whether by silent agreement or individually acknowledging it's in their best interests to keep the status quo in place.