Home sales fell nearly 6% in July as the housing market plunged into recession

Sales of previously owned homes fell nearly 6% in July compared to June, according to the National Association of Realtors’ monthly report.

The sales figure fell to a seasonally adjusted annual rate of 4.81 million units, the group added. It has been the slowest sales pace since November 2015, except for a slight dip at the start of the Covid pandemic.

Sales were down 20% from the same month last year.

“In terms of the economic impact, we are definitely in a housing recession Builders don’t build,” said Lawrence Yun, chief economist for Realtors. “However, are homeowners in a recession? Absolutely not. Homeowners are still very comfortable financially.”

July sales figures are based on closings, so deals could be signed in May and June. According to Mortgage News Daily, mortgage rates rose in June, with the average rate for a 30-year fixed loan exceeding 6%. It was then It settled back into the upper 5% range. That rate started this year around 3%, so affordability was tight in June, especially with rising inflation.

Homebuyers are also struggling with an even tighter supply. There were 1.31 million homes for sale at the end of July, unchanged from July 2021. At the current sales pace, this represents a 3.3-month supply.

Prices remain stubbornly high, even as demand falls due to weak affordability. The median price of a home sold in July was $403,800, up 10.8% year-over-year. Price gains are now modest as this is the smallest annual increase since July 2020.

“Median home sales prices continued to climb, but at a slower pace for the fifth consecutive month, highlighting how slowing buyer demand is moving the housing market back into normal activity,” said chief economist Daniel Hale. to Realtor.com. “A look at active inventory trends shows that home listings in July 2022 were nearly double the price reduction of a year ago.”

Sales activity at the high end of the market continues to be strong, although it is also fading fast. More supply is available in the upper layers. Sales of homes priced between $100,000 and $250,000 were down 31% from a year earlier, while sales of homes priced between $750,000 and $1 million were down 8%. Sales of homes priced over $1 million fell 13% from a year ago.

First-time buyers represented 29% of buyers in July. Historically they’ve usually made up 40% of sales, but they’ve struggled to afford it. High rent also makes it difficult for them to save a down payment.

Although sales are slow, it’s still a fast-moving market. A typical home went under contract in just 14 days in July, matching the fastest rate recorded in June. A year ago, it was 17 days. Yun called it “extraordinary.”