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Weekly Housing Trends: Week of July 9, 2022

Weekly Housing Trends: Week of July 9, 2022

What this Week’s Data Means:

We are in the middle of the summer season, historically the peak of homebuying activity. In a typical year, the warmer months are abuzz with transactions, as families with school-age children seek larger homes and urban professionals look for a beach home. This year’s summer housing markets are feeling the heat of record-high prices, combined with scorching inflation at a 40-year high, and mortgage rates which pushed monthly payments 50% higher than last year.

As households pay much more for cars, clothing, food, gasoline, and services, there are fewer dollars left over from each paycheck. With the cost of housing also rising at double-digit rates, financial decisions are becoming more difficult. For real estate markets, there is a growing affordability crisis, with’s Affordability Distribution Score hitting the lowest level in our data series. For a household earning a $75,000 income, only 23% of homes on the market are affordable. In comparison, in 2018, the same household could have afforded over 50% of homes listed for sale. This affordability challenge is being felt across most income ranges, with even households earning $200,000 able to afford 74% of listed homes in June 2022, compared with 87% of active inventory in June 2018.

The road ahead points toward a rebalancing of market conditions, away from the severe undersupply and win-at-all-costs competition of 2021. The Federal Reserve’s commitment to fight runaway inflation means that borrowing costs will continue to rise, dampening demand. At the same time, a post-pandemic new normal means we will see more homes for sale. In turn, prices will continue to adjust to a new equilibrium.

Key Findings:

  • The median listing price advanced by 15.9% over last year. The asking price remained on an upward trend at a double-digit yearly pace for a 30th consecutive week. However, listing price growth is on a downward trend, moving below the pace seen in late May and early June. With softening demand and rising supply, we expect to see home price growth continue to ease in the weeks ahead and continue to slow in the second half of 2022. The downward adjustment in the price trajectory signals a market reacting rationally to changes in underlying dynamics, and is a welcome development in the wake of an overheated market. Moreover, the outlook for buyers—many of whom have felt frustrated by hyper-competitive conditions last year—is starting to look more promising.  
  • New listings—a measure of sellers putting homes up for sale—declined 6% from one year ago. We have seen more homes come up for sale this year compared to a year ago in 13 of the last 16 weeks. However, due to people taking a break to celebrate the Independence Day holiday, fewer newly-listed homes showed up on our portal this past week than the same week last year. We expect the trend to normalize in the following weeks, as Americans are ready to embrace a post-pandemic reality. Homeowners who delayed their plans due to health, economic, or personal reasons, seem to be looking forward to the next stage, while capitalizing on current prices. With the housing landscape shifting at a quick pace, it will be important to remember when setting a sale price that conditions from even two months ago are different today. 
  • Active inventory continued to grow, rising 28% above one year ago. Several weeks of new listings coming online helped boost the inventory level almost a third higher than a year ago. Even though the number of homeowners putting properties for sale took a break last week, houses are also spending longer on the market in many large metro areas, contributing to a boost in homes for sale. Real estate markets remain undersupplied compared with 2019, but they are moving in the right direction.
  • Homes spent just 1 day less on the market than this time last year. The pace of transactions is moderating noticeably as higher prices and interest rates take a toll on demand. At this rate, homes will start lingering longer on the market and homeowners will have to contend with more offer contingencies and a return of negotiations. The market shift toward more balance is a welcome development in the wake of two feverish years.