US home sales slide almost 6%, fueling speculation that the market is in a 'recession'

  • Home sales in the U.S. fall for the sixth month in a row, the NAR said.
  • The fall now has both realtors and homebuilders thinking the market is in a "housing recession."
  • Meanwhile, home prices across the country still remain high compared to this time a year ago.

For the sixth straight month, existing home sales in the U.S. continue to slide.

Sales in July fell by nearly 6% compared to the previous month, according to findings by the National Association of Realtors (NAR) on Thursday.

The dip equates to about 4.81 million units, the NAR said, marking its slowest sales pace since November 2015 – with the exception of the drop seen at the beginning of the COVID-19 pandemic two years ago.

The NAR said sales fell about 20% compared to July 2021, when the housing market remained hot.

Chief Economist Lawrence Yun of NAR said in a statement that the ongoing sales decline reflects the impact of the 30-year fixed-rate mortgage peaking as high as 6% in early June before settling currently into a still-high 5% range compared to record low rates the past few years.

The latest figures further fuel a simmering debate about whether the once scorching housing market after two years is in the midst of a recession or a correction.

Earlier this week, the National Association of Home Builders' monthly survey said there's a strong consensus that there is a "housing recession." 

"In terms of economic impact, we are surely in a housing recession because builders are not building," the NAR's Yun said. "However, are homeowners in a recession? Absolutely not. Homeowners are still very comfortable financially."

Why is it a bit cozy for homeowners? 

The median existing-home price for all housing types in July was $403,800, up about 10.8% from July 2021 ($364,600), as home prices increased in all four regions, the NAR reported.

That makes  more than 10 years of year-over-year increases, the longest-running streak on record, the NAR said.

Are we in a housing recession?

So why all of the talk about a housing recession?

Well, NAHB Chief Economist Robert Dietz reiterated to USA TODAY earlier this week that he and various experts still estimate that a housing shortfall in the U.S. ranges from 1 million to nearly 4 million homes.

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And, while America is fighting off an economic recession, generally defined as when the Gross Domestic Product (GDP) declines for two straight quarters – roughly a six-month period – the NAR informally, but similarly defines a housing recession as when home sales decline for six straight months.

NAR top researcher Yun said Thursday that while the U.S. is "witnessing a housing recession in terms of declining home sales and home building," it’s not seeing a recession in terms of home prices.

"Inventory remains tight, prices continue to rise nationally with nearly 40% of homes still commanding the full list price," Yun said. "Home sales may soon stabilize since mortgage rates have fallen to near 5%, thereby giving an additional boost of purchasing power to home buyers."

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Neda Navab, president of brokerage operations at real estate company Compass, echoes a similar sentiment.

She said while sales have fallen to pre-pandemic days, there are several reasons "to be optimistic the housing market hit its trough this summer and will rebound" in the fall.

Navab said more recent developments, including reductions in gas prices, slowing inflation, "stabilizing mortgage interest rates, and a recovering stock market" have yet to show up in stronger housing data to come.

"Persistent underlying housing demand from aging millennials and others hasn’t evaporated overnight, even in the face of strong headwinds this year," Navab said in a statement. "Millions of hopeful buyers still want and need to buy a home for the same reasons they always have – a relocation, a change in lifestyle, and/or a need for more or less space."