Buyers Have More Opportunity in the Shifting Housing Market
Freshidea / Adobestock
For the sixth month in a row, existing-home sales declined, according to the National Association of Realtors (NAR). What’s more, every sales region in the country reported both month-over-month and year-over-year decreases. The drop in home sales was likely due to mortgage rates rising to 6% in early June. According to NAR Chief Economist Lawrence Yun, any decrease in mortgage rates would give an additional boost of purchasing power to homebuyers and help stabilize the market.
Price Growth Slowing
Another market indicator that could boost homebuyers is the peak of home selling prices appears to have passed. The median existing-home price in July increased 10.8% from a year earlier, with every sales region posting price gains. Though prices have seen year-over-year increases for the past 125 consecutive months, prices declined $10,000 from June’s record-high price of $413,800.
The decline in home prices from June to July can partially be explained by an increase in supply. By the end of July, total housing inventory reached 1,310,000 units, up 4.8% from a month earlier and unchanged from a year earlier. At the current sales pace, this level of inventory would supply the market for 3.3 months, up from only 2.9 months in June and 2.6 months in July 2021. Though inventory may be starting to increase, Yun still sees signs of a housing recession in terms of declining home sales and home building. “However,” he added, “it’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”
Home Sales Declining
Existing-home sales fell 5.9% from a month ago and 20.2% from a year ago. This drop in demand from homebuyers may result in some sellers being more motivated for a sale. Yet despite declining demand, properties sold in record time in July. The average property remained available for sale for just 14 days, unchanged from June and down from 17 days in July 2021. This set a record, as homes haven’t sold at a pace this quick since NAR began tracking days on market back in May 2011. Of all the homes sold in July, 82% were on the market for less than one month.
Northeast: Existing-home sales annual rate of 620,000; a decrease of 7.5% from June 2022 and 16.2% from July 2021. The median sales price of $444,000 increased 8.1% from July 2021.
Midwest: Existing-home sales annual rate of 1.19 million; a decrease of 3.3% from June 2022 and 14.4% from July 2021. The median sales price of $293,300 increased 7% from July 2021.
South: Existing-home sales annual rate of 2.13 million; a decrease of 5.3% from June 2022 and 19.6% from July 2021. The median sales price of $365,200 increased 14.7% from July 2021.
West: Existing-home sales annual rate of 870,000; a decrease of 9.4% from June 2022 and 30.4% from July 2021. The median sales price of $614,900 increased 8.1% from July 2021.