Final Look at Local Housing Markets in July

CALCULATEDRISK

By Bill McBride

Each month I track closed sales, new listings and active inventory in a sample of local markets around the country (over 40 local housing markets) in the US to get an early sense of changes in the housing market. In addition, we can look for regional differences.

After the National Association of Realtors® (NAR) releases the monthly existing home sales report, I pick up additional local market data that is reported after the NAR (and I’m frequently adding more markets). This is the final look at local markets in July.

The big story for July existing home sales was the large year-over-year (YoY) decline in sales. Also new listings were down sharply YoY and active listings are now down YoY.

First, here is a table comparing the year-over-year Not Seasonally Adjusted (NSA) declines in sales since January 2022 from the National Association of Realtors® (NAR) with the local markets I track. So far, these measures have tracked pretty well. The NAR reported sales were down 18.1%% NSA YoY in July.

Active Inventory in July

Here is a summary of active listings for these housing markets in July.

Inventory for these markets were up 52% in January and are now down 16% YoY.

Notes for all tables:

  1. New additions to table in BOLD.
  2. Northwest (Seattle), Jacksonville Source: Northeast Florida Association of REALTORS®
  3. Totals do not include Atlanta, Denver or Minneapolis (included in state totals)

New Listings in July

And here is a table for new listings in July (some areas don’t report new listings). For these areas, new listings were down 22.2% YoY. Potential sellers that are locked into their current homes with low mortgage rates has pushed down new listings.

Last month, new listings in these markets were down 25.0% YoY. The decline in new listing in July – for these areas – was similar to the YoY decline for the last several months.

Closed Sales in July

And a table of July sales.

In July, sales in these markets were down 16.9%. In June, these same markets were down 16.9% YoY Not Seasonally Adjusted (NSA).

My early expectation is we will see a somewhat lower level of sales in August on a seasonally adjusted annual rate basis (SAAR) than in July.

Note that closed sales in July were mostly for contracts signed in May and June. Mortgage rates, according to the Freddie Mac PMMS, averaged around 6.4% in May and 6.7% in June. August sales will be mostly for contracts signed in June and July, mortgage rates averaged 6.8% in July, so seasonally adjusted closed sales will likely be less in August compared to July.

This graph shows existing home sales by month for 2022 and 2023. Since sales were declining every month last year, seasonally adjusted, the YoY decline might be less as the year progresses – and sales could be up YoY at the end of 2023 – however, the recent surge in mortgage rates over 7% will impact closed sales in September, and it now seems likely that in a few months existing home sales will fall below the previous cycle low of 4.00 million in January 2023.