Research Brief
Housing
October 2022

Home Sales Continue to Slide, Slowdown
Stretches Across Housing Continuum
Firm price tags keep buyers on the sidelines. Purchases of single-family homes declined for an eighth straight month, marking the lowest September measure since 2012. The elevated cost of borrowing, with the average 30-year fixed-rate mortgage surpassing the Global Financial Crisis peak in late October, is the primary contributor to this ongoing cooldown. Even with the option to refinance down the road, prospective buyers are remaining passive, likely due to an emerging price expectations gap. Over the last two quarters, the median price has come down by less than 1 percent, while the volume of home purchases plummeted almost 20 percent. Buyers could be anticipating greater price drops to help offset higher borrowing costs, but that has not come to fruition. The median sales price of a single-family home rose again in September to $390,800, reversing a three-month downward trend. A significant price correction may not be on the horizon, given the still-low number of home listings by historic standards.

Select group of markets have been more resilient. While national apartment vacancy increased 170 basis points since March, some metros posted availability drops during that span. This list includes a handful of tertiary markets in Texas, such as Midland-Odessa, Lubbock, Waco and Bryan-College Station. Many of these locations have universities and appeal to residents relocating within the region to lower their costs of living.
Developing Trends
Number of new homes for sale remains near record heights. In September, the supply of new home listings at the current sales rate held north of eight months, an elevated threshold met in every period going back to April. For context, the long-term average spanning to the 1960s is about six months’ worth of supply. The incentive for owners to move up the quality stack and purchase these newly-built dwellings is severely diminished in the current two-decade-high mortgage rate climate. This inactivity is putting a lid on the number of starter homes that come to the market, making it challenging for prospective first-time buyers to find options in their budget range, while also buttressing values.
Existing home listings shrink again, despite reduced buying. It is generally expected that slower purchase activity results in more homes staying on the market, but this has not been the case so far this cycle. The number of existing homes for sale fell for a second straight month in September. A lack of owners trading up, a general response to broad-based economic uncertainty and the potential for stalled career advancement are the primary causes.
8.1% |
13.9% |
Year-Over-Year Change in the Median Price of an Existing Home |
Year-Over-Year Change in the Median Price of a Newly-Built Home |
* As of October 27
Sources: Marcus & Millichap Research Services; Capital Economics; Freddie Mac; Moody’s Analytics;
Mortgage Bankers Association; National Association of Home Builders; National Association of Realtors;
RealPage, Inc.; U.S. Bureau of Labor Statistics; U.S. Census Bureau; Wells Fargo
TO READ THE FULL ARTICLE
