The couple sells the house and then wants to do something else with the money they get back. Maybe they buy another house or give money to their children or both. They still want to do those things, but they have $1m less from selling the property than they expected, so they liquidate $1m in savings which they wouldn't have otherwise needed to do. Alternatively they spend $1m less, or invest $1m less, which is $1m less revenue or capital for people and businesses in the rest of the economy. Either way it's not good.

It's a bit simplistic, but the point is there is a real loss of wealth in society. If the house is sold the new buyer got a bargain, but they probably just got more house for the same money spent on their side. That's good for them, but on that end of the transaction it's likely to be roughly economically neutral, in terms of the whole economy.

You can flip this argument around for the person buying the house, though, so it doesn't really work. What if the house didn't sell for $1m less? Then those new buyers just lost an extra $1m that they otherwise could have invested elsewhere in the economy. Or conversely, when the house sells for $1m less, you're freeing them up from that additional burden and they can put their next $1m into investments besides the house.

That wealth wasn't doing anything useful. It was just a number on a piece of paper. Sure, they had borrowed against it but their cavernous house isn't capital in the same way a hammer is. They can't tear of a piece of house and barter it for food, for example. There's no utility in their house for anyone but them. I hope that extra million at least made it into the pockets of some of the homebuilders.