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Are We ‘Witnessing a Housing Recession?’

Existing-home sales sagged for the sixth straight month in July, according to the National Association of Realtors. All four major U.S. regions recorded month-over-month and year-over-year sales declines.

Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums and co-ops– slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% to 6.03 million in July 2021.

"The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June," said NAR Chief Economist Lawrence Yun. "Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers."

Total housing inventory registered at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged from the previous year. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 2.9 months in June and 2.6 months in July 2021. The median existing-home price for all housing types in July was $403,800, up 10.8% from July 2021 ($364,600), as prices increased in all regions. This marks 125 consecutive months of year-over-year increases, the longest-running streak on record.

"We're witnessing a housing recession in terms of declining home sales and home building," said Yun. "However, 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."

Properties typically remained on the market for 14 days in July, the same as in June and down from 17 days in July 2021. The 14 days on market are the fewest since NAR began tracking it in May 2011. Some 82% of homes sold in July 2022 were on the market for less than a month. First-time buyers were responsible for 29% of sales in July, down from 30% in June and also in July 2021. NAR's 2021 Profile of Home Buyers and Sellers –released in late 2021– reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 24% of transactions in July, down from 25% in June, but up from 23% in July 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 14% of homes in July, down from 16% in June and 15% in July 2021. Meanwhile, distressed sales –foreclosures and short sales– represented approximately 1% of sales in July, essentially unchanged from June 2022 and July 2021.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.41% in July, down from 5.52% in June. The average commitment rate across all of 2021 was 2.96%.

Realtor.com's Market Trends Report in July shows that the largest year-over-year median list price growth occurred in:

  1. Miami (+36.2%)
  2. Memphis (+32.7%)
  3. Orlando (+28.4%)

Phoenix reported the highest increase in the share of homes that had their prices reduced compared to last year (+31.8 percentage points), followed by Las Vegas (+28.6 percentage points) and Austin (+27.8 percentage points).

Single-family and Condo/Co-op Sales

Single-family home sales declined to a seasonally adjusted annual rate of 4.31 million in July, down 5.5% from 4.56 million in June and down 19.0% from one year ago. The median existing single-family home price was $410,600 in July, up 10.6% from July 2021.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 500,000 units in July, down 9.1% from June and down 29.6% from one year ago. The median existing condo price was $345,000 in July, an annual increase of 9.9%.

"Buying a home remains a worthwhile investment that brings an unmatched combination of security, freedom and accomplishment associated with the American Dream," said NAR President Leslie Rouda Smith, a Raltor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. 'Realtors serve as consumer champions who provide trusted guidance and insight to help home buyers and sellers achieve their goals."

Regional Breakdown

Existing-home sales in the Northeast slid to an annual rate of 620,000 in July, down 7.5% from June and 16.2% from July 2021. The median price in the Northeast was $444,000, an increase of 8.1% from the previous year. Existing-home sales in the Midwest declined 3.3% from the prior month to an annual rate of 1,190,000 in July, dropping 14.4% from July 2021. The median price in the Midwest was $293,300, up 7.0% from the previous year.

Existing-home sales in the South waned 5.3% in July to an annual rate of 2,130,000, down 19.6% from one year ago. The median price in the South was $365,200, an increase of 14.7% from July 2021. Existing-home sales in the West retracted 9.4% compared to last month to an annual rate of 870,000 in July, down 30.4% from this time last year. The median price in the West was $614,900, an 8.1% jump from July 2021.

"The action is in the pricey West region which experienced the sharpest sales decline combined with a sizable inventory increase," said Yun. "It's likely some Western markets will see prices decline, and that will be welcome news for buyers who watched rapid price jumps during the past two years."

To read the full report, including more data and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport, with more than six years of writing experience. She has served as Editor-in-Chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington. She has covered events such as the Byron Nelson, Pac-12 Conferences, the Women in Dallas Film Festival, to freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, she is an avid jazz lover and reader. She can be reached at [email protected]
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