August 22, 2022: -Sales of formerly owned homes decreased nearly 6% in July compared with June, according to a report from the National Association of Realtors.

The group added that the sales count declined to a seasonally adjusted annualized rate of 4.81 million. It is the slowest sales speed since November 2015, besides a brief decrease at the start of the Covid pandemic.

Sales decreased by 20% from the same month a year ago.

“In terms of economic impact, we are certainly in a housing recession because builders are not building,” said Lawrence Yun, chief economist for the Realtors.

The July sales figures are based on closings, so the contracts were signed in May and June. Mortgage rates went higher in June, with the average speed on the 30-year fixed loan, which crosses 6%, according to Mortgage News Daily. It is settled back into the high 5% range.

While demand has lowered because of the weaker affordability, prices remain high. The average home price traded in July was $403,800, an upsurge of 10.8% yearly. However, price gains are now moderating, as this is the smallest annual increase since July 2020.

“The median home sales price continued to surge, but at a slower speed for the fifth consecutive month, shining a light on the way downshifting buyer demand is pushing the housing market back toward a more normal pace of activity,” said Danielle Hale, chief economist at Realtor.com. “A look at active inventory trends indicates that home listings were nearly twice as likely to have had a price cut in July 2022 compared to one year ago.”

Sales training persists to be stronger on the higher end of the market, although that too is fading fast. There is a bigger supply available on the top tiers. Sales of homes priced between $100,000 and $250,000 were 31% lower than the previous year, while sales of homes priced between $750,000 and $1 million were down 8%. Sales of homes priced above $1 million decreased 13% from a year ago.

First-time buyers show just 29% of buyers in July. Historically they usually make up nearly 40% of sales, but they struggle the most with affordability. High rents also make it harder for them to save for a down payment.

Even after sales come down, this is always a market that is in demand. A typical home in July came in just 14 days, which matches the fastest ever recorded in June. One year ago, it was 17 days.