Housing Market Recession

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In July 2022, existing-home sales were down 5.9% from June and 20.2% from one year ago. ~ National Association of Realtors

U.S. existing home sales fell for the sixth consecutive month in July 2022, the longest streak of declines in eight years, the National Association of Realtors reported. Higher mortgage rates and a shortage of available homes on the market have cooled the once red-hot housing market.

Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall. These figures include condos and co-ops, in addition to single-family homes.

The drop off is a clear sign that the formerly booming market has stalled. Moreover, home building is slowing and mortgage applications are falling as more potential buyers are deciding to stay on the sidelines. “We’re witnessing a housing recession in terms of declining home sales and home building,” said Lawerence Yun, chief economist for the National Association of Realtors. “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.”

As new and existing home sales are slowing, the relentless rise in house price are beginning to show signs of easing. The median sales price for a home fell in July, the first decline since January.

Higher borrowing cost has taken some of the air out of the market. The Federal Reserve has been raising interest rates to control inflation and mortgage rates have risen in response.

The combination of higher housing prices and rising interest rates has pushed housing affordability to its lowest level in decades.

Moreover, home builder confidence plunged to a new two-year low in August as higher interest rates, posting its eighth consecutive monthly decline.

Additionally, lingering supply chain problems and record home prices continue to exacerbate housing affordability challenges, the National Association of Home Builders reported, prompting some experts to warn that the housing market collapse could be far from over.

References:

  1. https://www.nar.realtor/newsroom/existing-home-sales-retreated-5-9-in-july
  2. https://www.forbes.com/sites/jonathanponciano/2022/08/15/housing-market-recession-is-here-home-builders-slash-prices-as-buyers-cancel-contracts-mortgage-rates-rise/
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