Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Existing Home Sales Declined 5.4% in June
Posted Under: Data Watch • Government • Home Sales • Housing • Interest Rates
Supporting Image for Blog Post

 

Implications:  Existing home sales fell for the fifth month in a row in June, posting the longest streak of declines since 2013.  Recent volatility shows that the housing market is struggling to find its footing so far in 2022, with falling affordability playing a major role.  The prime culprit recently has been 30-year mortgage rates, which have already risen more than 200 basis points since December and are now hovering just below 6%, the highest level since 2008.  Even more notable than the decline in sales in today’s report is that despite surging mortgage rates median prices are still climbing, posting a fifth consecutive monthly gain in June. Part of this is just seasonality (prices typically rise heading into the summer buying season), and median price growth in the past year has slowed to 13.4% from a peak of 25.2% in May 2021, but the “reverse wealth effect” the Federal Reserve has been looking for has yet to show up in the housing market. Assuming a 20% down payment, the rise in mortgage rates and home prices since December amount to a 56% increase in monthly payments on a new 30-year mortgage for the median existing home. No wonder sales have slowed down!  One piece of good news in today’s report is that the inventory of existing homes on the market has begun to rise relatively rapidly, and is now up 2.4% from a year ago, the best way to look at the data given the seasonality of the housing market. Notably, this is the first annual increase we have seen in housing inventory since May of 2019. Meanwhile the months’ supply of existing homes for sale (how long it would take to sell today’s inventory at the current sales pace) rose to 3.0 months in June, the highest level in nearly two years.  While this represents much needed progress, it’s important to note that inventory still remains low from a historical perspective. What is really impressive is that despite the lack of options demand remains strong, with buyer urgency so high in June that 88% of existing homes sold were on the market for less than a month.  While sales are clearly under pressure, this is not a repeat of 2007-09. We do not foresee a widespread collapse in home sales even with higher mortgage rates, though it is likely that existing home sales wind up lower in 2022 than 2021.  More inventory is finally becoming available, which will help price gains moderate further.

Click here for PDF version

Posted on Wednesday, July 20, 2022 @ 10:39 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2022 All rights reserved.