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Since the 2008 housing bubble burst, the word recession strikes a stronger emotional chord than it ever did before. And while thereā€™s some debate around whether weā€™re officially in a recession right now, the good news is experts say a recession today would likely be mild and the economy would rebound quickly. As the 2022 CEO Outlook from KPMG says:

ā€œGlobal CEOs see a ā€˜mild and shortā€™ recession, yet optimistic about global economy over 3-year horizon . . . More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.ā€ To add to that sentiment, housing is typically one of the first sectors to rebound during a slowdown. As Ali Wolf, Chief Economist at Zonda, explains:

ā€œHousing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.ā€ Part of that rebound is tied to what has historically happened to mortgage rates during recessions. Hereā€™s a look back at rates during previous economic slowdowns to help put your mind at ease.

Mortgage Rates Typically Fall During Recessions Historical data helps paint the picture of how a recession could impact the cost of financing a home. Looking at recessions in this country going all the way back to 1980, the graph below shows each time the economy slowed down mortgage rates decreased.




Fortune explains mortgage rates typically fall during an economic slowdown: ā€œOver the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.ā€

While history doesnā€™t always repeat itself, we can learn from and find comfort in the trends of whatā€™s happened in the past. If youā€™re thinking about buying or selling a home, you can make the best decision by working with a trusted real estate professional. That way you have expert advice on what a recession could mean for the housing market.

Bottom Line History shows you donā€™t need to fear the word recession when it comes to the housing market. If you have questions about whatā€™s happening today, letā€™s connect so you have expert advice and insights you can trust.

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Key Highlights

  • Existing-home sales fell for the sixth consecutive month to a seasonally adjusted annual rate of 4.81 million. Sales were down 5.9% from June and 20.2% from one year ago.

  • The median existing-home sales price climbed 10.8% from one year ago to $403,800. That's down $10,000, however, from last month's record high of $413,800.

  • The inventory of unsold existing homes rose to 1.31 million by the end of July, or the equivalent of 3.3 months at the current monthly sales pace.


WASHINGTON (August 18, 2022) ā€“ Existing-home sales sagged for the sixth straight month in July, according to the National Association of REALTORSĀ®. All four major U.S. regions recorded month-over-month and year-over-year sales declines.

Total existing-home sales,1 https://www.nar.realtor/existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 5.9% from June to a seasonally adjusted annual rate of 4.81 million in July. Year-over-year, sales fell 20.2% (6.03 million in July 2021).

"The ongoing sales decline reflects the impact of the mortgage rate peak of 6% in early June," said NAR Chief Economist Lawrence Yun. "Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers."

Total housing inventory2 registered at the end of July was 1,310,000 units, an increase of 4.8% from June and unchanged from the previous year. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 2.9 months in June and 2.6 months in July 2021.

The median existing-home price3 for all housing types in July was $403,800, up 10.8% from July 2021 ($364,600), as prices increased in all regions. This marks 125 consecutive months of year-over-year increases, the longest-running streak on record.

"We're witnessing a housing recession in terms of declining home sales and home building," Yun added. "However, it's not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price."

Properties typically remained on the market for 14 days in July, the same as in June and down from 17 days in July 2021. The 14 days on market are the fewest since NAR began tracking it in May 2011. Eighty-two percent of homes sold in July 2022 were on the market for less than a month.

First-time buyers were responsible for 29% of sales in July, down from 30% in June and also in July 2021. NAR's 2021 Profile of Home Buyers and Sellers ā€“ released in late 20214 ā€“ reported that the annual share of first-time buyers was 34%.

All-cash sales accounted for 24% of transactions in July, down from 25% in June, but up from 23% in July 2021.

Individual investors or second-home buyers, who make up many cash sales, purchased 14% of homes in July, down from 16% in June and 15% in July 2021.


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