July 2022 Existing Home Sales:
What happened this month:
Sales of existing houses fell for a sixth month in July, following a sharp drop in June pending home sales and one fifth consecutive month of decline in single-family housing starts. Existing home sales in July hit a pace of 4.81 million, down 5.9% from June and 20.2% from a year ago. Many home buyers were stunned by mortgage rates which climbed 70 basis points in just 3 weeks, peaking in the second half of June, around the time July home closings would likely have been under contract. Fortunately, mortgage rates have since declined from those highs, but buyers who have seen the mortgage rate landscape change so suddenly will likely remember the experience and have all the more reason to refrain from bidding on the top dollar.
Home prices continue to climb:
The median home sale price continued to climb, but at a slower pace for the fifth straight month. The deceleration in prices highlights how the drop in demand from buyers is bringing the housing market back to a more normal pace of activity. The national median home sale price rose 10.8% to $403,800, down $10,000 from June’s seasonal peak sale price. A review of active inventory trends shows that home listings have been almost twice as likely to have suffered a price drop in July 2022 than a year ago.
What lies ahead for homebuyers, sellers and the market:
In July, we saw the first sign that the housing market refresh could affect homeowners’ eagerness to sell. As seller sentiment has declined and the the number of homes on the market has increased nationwide, the number of newly listed homes — sellers putting homes on the market — has actually declined. This pullback by sellers could slow the speed of rebalancing in the real estate market. In other words, buyers looking for more bargaining power may need to be patient. Month supply rose to 3.3 months at the end of July, up from last month (2.9 months) and last year (2.6 months), but still below a balanced level at national scale.
But as is often the case in real estate, location matters. List of Realtor.com’s Hottest ZIP Codes in 2022 shows that affordable areas in the northeast, especially New England, remain relatively competitive. Sellers in these ZIPs may still see strong demand as homebuyers looking to beat rising housing costs move to areas that offer real estate value and a location that supports an occasional commute to some of the major highest paying markets. Regional home sales data reinforces this trend. Home sales were down 16.2% from a year ago in the Northeast and 14.4% in the Midwest, compared to declines of 19.6% in the South and 30.4 % in the West.