Existing Home Sales Continue to Collapse


Gross sales of present houses sank some other 5.9 % in July, to a 4.81 million seasonally adjusted annual fee. That's the 6th consecutive per month decline leaving the promoting tempo on the lowest stage since Might 2020, the low of the lockdown recession. Apart from the lockdown recession, gross sales are at their lowest since November 2015. Gross sales had been down 20.2 % from a yr in the past and 25.9 % from the January top.

Gross sales out there for present single-family houses, which account for roughly 89 % of general existing-home gross sales, dropped 5.5 % in July, coming in at a 4.31 million seasonally adjusted annual fee (see first chart). Gross sales are down 19.0 % from a yr in the past and 25.0 % from the January top. Unmarried-family gross sales additionally fell for the 6th consecutive month and had been at their slowest tempo because the Might 2020 lockdown recession.

The only-family phase noticed gross sales decline in all 4 areas. Gross sales fell 9.5 % within the West, 5.5 % within the South, the most important area through quantity, 5.4 % within the Northeast, the smallest area through quantity, and a couple of.6 % within the Midwest. Gross sales had been down double-digits in all 4 areas from a yr in the past (-30.3 % within the West, -17.5 % within the South, -15.9 % within the Northeast, and -13.7 % within the Midwest). Gross sales also are underneath the December 2019 pre-lockdown stage in all 4 areas.

Rental and co-op gross sales fell 9.1 % for the month, leaving gross sales at a 500,000 annual fee for the month as opposed to 550,000 in June (see first chart). Measured from a yr in the past, rental and co-op gross sales had been off 29.6 %, and had been at their slowest tempo since June 2020.

Rental and co-op gross sales had been down in all 4 areas in July, falling 18.2 % within the Northeast, 14.3 % within the Midwest, 8.3 % within the West, and four.0 % within the South. From a yr in the past, gross sales had been additionally down in all 4 areas (-33.3 % within the South, -31.3 % within the West, -25.0 % within the Midwest, and-18.2 % within the Northeast).

Overall stock of present houses on the market rose in July, expanding through 4.8 % to one.31 million, leaving the months’ provide (stock instances 12 divided through the yearly promoting fee) up 0.4 months at 3.3, the 6th consecutive building up and the very best since June 2020, however nonetheless low through historic comparability.

For the single-family phase, stock used to be up 5.4 % for the month at 1.17 million and is 3.5 % above the July 2021 stage. The months’ provide used to be 3.3, up from 2.9 within the prior month, the very best since June 2020 (see 2d chart). Via June 2022, the months’ provide of latest single-family houses in the marketplace had surged to 9.3 months, the very best Might 2010, and an overly excessive (vulnerable) studying through historic comparability (see 2d chart).

The rental and co-op stock larger 5.1 % to 144,000, pushing the months’ provide as much as 3.5 from 3.0 in June.  Months’ provide is 16.7 % above July 2021 and has risen for 6 consecutive months.

The median sale worth in July of an present domestic used to be $403,800, 10.8 % above the yr in the past worth. For single-family present domestic gross sales in July, the cost used to be $410,600, a ten.6 % upward push during the last yr (see 3rd chart). The median worth for a rental/co-op used to be $345,000, 9.9 % above July 2021.

Loan charges have eased again not too long ago, hitting 5.22 % round mid-August, down from a top round 5.81 % in overdue June however nonetheless neatly above the lows round 2.65 % in January 2021 (see fourth chart).

The combo of near-record-high domestic costs and sharply upper loan charges has despatched housing affordability plunging. The Housing Affordability Index from the Nationwide Affiliation of Realtors measures whether or not or no longer an ordinary kinfolk may just qualify for a loan mortgage on an ordinary domestic. A normal house is outlined because the nationwide median-priced, present single-family domestic as calculated through NAR. The standard kinfolk is outlined as one incomes the median kinfolk source of revenue as reported through the U.S. Bureau of the Census. A worth of 100 signifies that a kinfolk with the median source of revenue has precisely sufficient source of revenue to qualify for a loan on a median-priced domestic. An index above 100 means that a kinfolk incomes the median source of revenue has greater than sufficient source of revenue to qualify for a loan mortgage on a median-priced domestic, assuming a 20% down fee. As of June, the index stood at 98.5, the bottom since June 1989 (see fourth chart).

Housing is more likely to proceed to be underneath intense power as near-record-high costs and increased loan charges scale back affordability and push increasingly more consumers out of the marketplace.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following greater than 25 years in financial and monetary markets analysis on Wall Boulevard. Bob used to be previously the pinnacle of International Fairness Technique for Brown Brothers Harriman, the place he advanced fairness funding technique combining top-down macro research with bottom-up basics.

Previous to BBH, Bob used to be a Senior Fairness Strategist for State Boulevard International Markets, Senior Financial Strategist with Prudential Fairness Workforce and Senior Economist and Monetary Markets Analyst for Citicorp Funding Products and services. Bob has a MA in economics from Fordham College and a BS in trade from Lehigh College.

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