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Prices Begin To Tumble From Their Record Peak

Katie Jensen
Jul 18, 2022
home prices fall

U.S. homes came down 0.7% from its record-breaking peak in June.

KEY TAKEAWAYS
  • Sellers’ asking prices came down 3% from their May peak.
  • Home supply posted its first year-over-year increase since August 2019.
  • Fewer people searched for “homes for sale” on Google, down 5% year-over-year.
  • The monthly mortgage payment on homes with the median asking price hit $2,387, up 44% from a year earlier.

The median sale price for all U.S. homes came down 0.7% from its record-breaking peak in June, according to a new report from Redfin. 

Sellers’ asking prices came down 3% from their May peak as the share of homes with price drops hit another new high. Home supply posted its first year-over-year increase since August 2019 as pending sales continued to slide. These changes are indicative that buyers are reaching their limit on costs — not just of homes and mortgages, but also food, transportation, and energy. 

A number of factors are contributing to this slowdown in home buying, including rising mortgage rates, unaffordability, and low inventory. 

For the week ending July 14, 2022, 30-year mortgage rates rose to 5.51%. This was down from a 2022 high of 5.81% but up from 3.11% at the start of the year. The report also found fewer people searched for “homes for sale” on Google, down 5% year-over-year during the week ending on July 9. 

The Redfin Homebuyer Demand Index, a measure of requests for home tours and other home-buying services from Redfin agents, was down 18% year-over-year during the week ending July 10. Touring activity as of July 10 was up 1% from the start of the year, compared to a 23% increase at the same time last year, according to company ShowingTime. 

Mortgage purchase applications were down 18% from a year earlier during the week ending on July 8, while the seasonally-adjusted index was down 4% week-over-week. 

Median home sale prices are still up 12% year-over-year to $393,449, but down 0.7% from June’s peak during the four-week period ending June 19. Last year, median price rose 0.9% during the same period.

The median asking price of newly listed homes increased 14% year-over-year to $397,475, but down 2.8% from the all-time high set during the four-week period ending May 22. Last year, median prices for newly listed homes were down 0.9% during the same period.

The monthly mortgage payment on homes with the median asking price hit $2,387 at the current 5.51% mortgage rate, up 44% from $1,663 a year earlier, when mortgage rates were 2.88%. That’s down slightly from the $2,487 peak reached during the four weeks ending June 12. 

Pending home sales were down 14% year-over-year, marking the largest decline since May 2020. Meanwhile, new listings of homes for sale were down 1.7% from a year earlier, and active listings rose 1.3% year over year — the largest increase since August 2019.

Of the homes that went under contract, 43% had an accepted offer within the first two weeks on the market, down from 47% a year earlier. Additionally, 29% of homes that went under contract had an accepted offer within one week of hitting the market, down from 33% a year earlier. Homes that sold were on the market for a median of 18 days, remaining flat from a year earlier and up slightly from the record low of 15 days set in May and early June. 

Overall, 51% of homes sold above list price, down from 54% a year earlier. Yet, an average of 7.1% of homes for sale each week had a price drop, marking a record high as far back as the data goes, through the beginning of 2015. 

The average sale-to-list price ratio — a measure of how close homes are selling to their asking prices — declined to 101.6%. This means the average home sold for 1.6% above its asking price. This is down from 102.2% a year earlier.

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