For the sixth straight month, existing-home sales declined in July, according to the National Association of REALTORS®.
But the question remains: does this hint at a recession in the housing market or is the market simply returning to a more normalized state?
Below, we cover the numbers from NAR’s existing-home sales data and Lawrence Yun’s thoughts on current market conditions.
Existing-Home Sales and Housing Inventory
The total number of existing-home sales in July decreased 5.9% from June and 20.2% year-over-year.
While the total number of completed transactions decreased, total housing inventory increased 4.8% from June, providing buyers with more options. Unsold inventory in July was at a 3.3-month supply, up from 2.9 months in June and 2.6 months in July 2021.
The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June. Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers.
While the data shows a decrease in home sales and an increase in inventory, it also shows that home prices continue to rise.
The median existing-home price for all housing types was $403,8000 in July—a 10.8% increase from this time last year. For single-family homes, the median price was $410,600, a 10.6% increase from July 2021. Existing condo prices also increased by 9.9% compared to last year, with the median price of $345,000.
This is the 125th consecutive month of year-over-year increases in existing-home prices, the longest-running streak on record.
Lawrence Yun’s thoughts on a Housing Recession
Lawrence Yun spoke about the difference between the number of home sales and home prices.
We’re witnessing a housing recession in terms of declining home sales and home building. 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.
While the word recession may induce fear in consumers, the data shows that home values remain strong, even as buyers start to gain power in the market.
For more on July’s existing-home sales, go to NAR’s statistical report.