E Economics

U.S. Housing Recession Is Confirmed As Prices Started Dropping In July

24 août, 2022
Housing Recession

In a context where both new and existing home sales have collapsed by double digits since a few months, housing recession is now confirmed. According to two housing firms, in July, housing prices contracted for the first time in many years.

1. U.S. Home Prices Fell For The First Time Since 2012 – Zillow

As I expected, housing prices started falling in July. According to Zillow latest report, « The typical U.S. home value declined by 0.1% ($366) month over month in July and now stands at $357,107, as measured by the raw Zillow Home Value Index (ZHVI). » The report added « It’s not unusual for home price growth to decelerate this time of year, but the small decline is the first monthly dip since 2012. » 

2. In July, The Decline In U.S. Housing Prices Was The Largest Since January 2011 – Black Knight

Zillow results for July were confirmed by Black Knight, a mortgage software, data and analytics firm. According to their analysis, « home prices declined 0.77% from June to July, the first monthly decline in nearly three years. » In addition, « While the drop may seem small, it is the largest single-month decline in prices since January 2011. It is also the second-worst July performance dating back to 1991. »

Future doesn’t look bright for housing market in a contet where 30-year mortgage rates remained well above 5%, a key threshold above which demand is significantly affected. In this context, “Further price corrections are likely on the horizon as we move into what are typically more neutral seasonal months for the housing market,” said a Black Knight executive.