Housing Market Falls Into Recession As Home Sales Drop By Nearly 6%
By Bill Galluccio
August 18, 2022
The housing market has entered a recession following the sixth-straight month of declines in home sales. Total home sales fell by 5.9% from June to July, according to new data released by the National Association of Realtors. Year-over-year, home sales are down by 20.2%.
The decrease in home sales was caused partly by high mortgage rates, which hit 6% in June, doubling from 3% at the start of the year.
"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."
Another factor in the decline is the continued high prices of homes on the market. The median home price was $403,800 in July, which is nearly 11% higher than last year. The median price for a home has increased for record 125-straight months.
"We're witnessing a housing recession in terms of declining home sales and home building," Yun added. "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."