Heading into the July 2022 real estate market, the United States continues to face timeless obstacles. As the latest inflation data shows year-over-year growth, the white-hot U.S. real estate market displays signs of stalling.
Despite 2021 reflecting a surge in home sales activity, sales of existing homes just achieved their fifth month in a row of declining statistics. As a matter of fact, sales of existing homes fell to their lowest point since June 2020.
Limited Housing Inventory and Rising Home Prices Dissuade Potential Buyers
One of the most notable challenges for the July 2022 real estate market concerns housing inventory. Although housing inventory saw its first increase in three years, existing home sales decreased by 14% compared to the prior year. Currently, inventory of existing homes for sales hovers at a 3.0-month supply. Basically, a 6.0 supply represents equilibrium between buyers and sellers. Thus, a 3.0-month supply leans heavily in favor of home sellers.
In addition, home prices continue to soar. Worth noting, the median existing-home price jumped 13% higher year-over-year. Now, the U.S. median existing-home price snagged a record level of $416,000.
Decreasing Housing Starts Compound Challenges Facing July 2022 Real Estate
Compounding the inventory issue facing the July 2022 real estate scene, housing starts demonstrated weak results. For many years, the country has been in dire need of additional homes. Despite this long-term struggle, June 2022’s housing starts for single-family homes decreased. When examining May’s data, housing starts declined 8%, stumbling to the lowest level in two years.
More so, the most recent NAHB report showed homebuilder sentiment dropping to its lowest reading since May 2020. Of course, homebuilders point to higher prices for construction materials. However, they also attribute the sluggish housing starts figures to shortages for land, materials, and skilled labor.
Mortgage Applications and Refinancing Activity Plummet
As the Consumer Price Index (CPI) and Personal Consumption Expenditures Index (PCE) display rising inflation, mortgage rates followed suit. In turn, the increased mortgage rates contributed to the decline of mortgage application volumes, which fell to their lowest level since 2000. Additionally, according to the Mortgage Bankers Association (MBA), average 30-year fixed rates increased by 2.5% year-over-year.
With the rise in mortgage rates, purchase applications decreased by 19% from last year. But the real kicker? Refinance applications plummeted 80% year-over-year!
Looking Towards July 2022 Real Estate Market
After July’s housing reports offered very little solace, the real estate market is in for a lull. However, the Federal Reserve raised the federal funds rate by 75 basis points last month. Ultimately, this helps to lower inflationary pressures, which eases part of the problem over time.
Also, the first annual rate of increase to housing starts in three years shows that the market is headed back to equilibrium. The only question is how long it will take. For questions on the July 2022 real estate market, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.