Housing Prices Slide after Housing Sales Fall

The Great Recession

Interestingly, you’re about to find out that the fall in housing prices and home sales may power us further into high inflation for longer. We are entering a situation that could turn into a true oxymoron where lower prices equal higher prices as early as this week at the Fed’s Federal Open Market Committee meeting. I’ll tell you how that works.

Housing prices are finally falling

First the good news if you are home buyer who has been sidelined.

Sales of new single-family homes continue to fall, taking another 6.6 percent drop in June to 676,000 new homes sold (seasonally-adjusted) from 724,000 in May. Sales are down 19.4% year-on-year, which is considerable when you consider that the market was barely warming up from the COVIDcrash last June. However, sales are still 31.9% below the pre-COVIDcrash pace of 993,000 in January, 2020, which was the peak of Housing Bubble 2.0. Sales are now roughly back to the 677,000 level from August 2019. The only region where sales rose was the Midwest.

Higher housing prices are definitely putting off buyers as may be slightly rising mortgage rates. Housing shoppers, after all, buy payments, not typically total price of a home. Inventory has been a factor in declining sales, but right now sales are down while inventory is way up:

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