Existing Home Sales Fall to 2-Year Low

Existing home sales fell under five million annually for the first time in more than two years, marking the sixth consecutive monthly decrease, the National Association of Realtors reported Thursday.

The report said July existing home sales (https://www.nar.realtor/existing-home-sales) fell by 5.9% from June to a seasonally adjusted annual rate of 4.81 million. Year-over-year, sales fell by 20.2% (6.03 million in July 2021).

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 rose to $410,600 in July, up 10.6% from a year ago. Existing condominium and co-op sales fell to 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%.

All four regions reported declines. Sales in the Northeast fell to an annual rate of 620,000 in July, down 7.5% from June and 16.2% from a year ago. The median price in the Northeast rose to $444,000, an increase of 8.1% from a year ago. Sales in the Midwest fell by 3.3% from June to an annual rate of 1,190,000 in July and fell by 14.4% from a year ago. The median price in the Midwest rose to $293,300, up 7.0% from a year ago.

Sales in the South fell by 5.3% in July to an annual rate of 2,130,000 and fell by 19.6% from one year ago. The median price in the South rose to $365,200, an increase of 14.7% from a year ago. Sales in the West fell by 9.4% from June to an annual rate of 870,000 and fell by 30.4% from a year ago. The median price in the West rose to $614,900, an 8.1% jump from a year ago.

The culprit behind the retreat in resales is higher mortgage rates, which have significantly further reduced affordability and pushed prospective buyers to the sideline,” said Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C. “Inventories continue to rise as buyers tap the brakes and more homeowners seek to sell their homes before the market cools off even further.”

Despite the rise in inventories, Vitner noted that homes continue to sell relatively quickly is further evidence that supply remains tight. “Fed officials pay particularly close attention the housing market and are monitoring how higher mortgage rates are impacting home sales and housing prices in order to gauge how tighter monetary policy is affecting the broader economy,” he said.

“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.”

The report said total housing inventory registered at the end of July rose to 1,310,000 units, an increase of 4.8% from June but unchanged from a year ago. 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 price for all existing homes in July rose to $403,800, up 10.8% from a year ago ($364,600), as prices increased in all regions. This marks 125 consecutive months of year-over-year increases, the longest-running streak on record.

The report said properties typically remained on the market for 14 days in July, unchanged from June but down from 17 days in July 2021, marking the fewest since NAR began tracking it in May 2011. Eighty-two percent of homes sold in July were on the market for less than a month.

First-time buyers represented 29% of sales in July, down from 30% in June and a year ago. All-cash sales accounted for 24% of transactions in July, down from 25% in June, but up from 23% a year ago. Individual investors and second-home buyers purchased 14% of homes in July, down from 16% in June and 15% in July 2021.

Distressed sales represented 1% of sales in July, unchanged from June and a year ago.

This Monday, Aug. 22, the Mortgage Bankers Association releases its monthly Builder Applications Survey; on Tuesday, Aug. 24, HUD/Census releases its monthly New Residential Sales report for July; and on Wednesday, Aug. 25, NAR releases its Pending Home Sales Index. MBA NewsLink will provide coverage of each report.