Home Prices See Biggest Decline Since 2011
August 23, 2022
The housing market continues to cool from the red hot heights seen in recent years, with home prices nationally falling for the first time in nearly three years.
Home prices declined 0.77% from June to July, according to Black Knight, a mortgage software, data, and analytics firm. Though that drop may seem small, it is the largest single-month decline since January 2011.
It is also the second-largest price drop in July on records that go back to 1991. Price declines are rare during the summer months, as most families prefer moving into new homes while kids are out of school. The only time July has seen a larger price drop was in July 2010, when the economy was still in the midst of the Great Recession.
The recent slowdown in the housing market is largely caused by surging mortgage rates and climbing home prices, which have left many prospective buyers priced out.
According to Black Knight’s analysis, housing affordability is at the lowest level in 30 years. At today’s mortgage rates and home prices, it takes 32.7% of the median household income to purchase the average home. That’s nearly 13 percentage points higher than in the years before the pandemic.
The one-two punch of higher prices and more expensive borrowing has caused sales activity to slow significantly in recent months. Sales of newly constructed homes fell 12.6% in July from the month before and were down 29.6% from a year earlier.
In July, just 511,000 new homes were sold, on a seasonally adjusted annualized basis. That’s the lowest number since January 2016. In July 2021, 726,000 newly constructed homes were sold.