Existing home prices down $18k from June 2022 peak to $396,100. Is this affordable?


Sales of existing homes rose slightly by 0.2% in May after declining 14 of 15 months through April. Per the latest NAR data for May, existing home prices are $396,100. Is this affordable? Let’s take a quick look at this and other key stats.


– Sales of existing (as opposed to newly built) homes was 4.30 million for May (annualized, seasonally adjusted).

– This is up 0.2% from April and down 20.4% from one year ago.

– Besides rising slightly in February and May 2023, existing home sales declined 14 of 16 months through May.

– Available inventory of homes to buy is super low at 1.08 million units, but up a bit (3.8%) from April.

– Median existing home prices rose $7,300 from $388,800 in April to $396,100 in May.

Today’s $396,100 median home price has dropped $17,700 from the June 2022 peak of $413,800.

– Lower prices since last June is an important trend because existing home sales are 86% of all sales (sales of newly built homes are the other 14%).

So a strong majority of homes for sale in America are lower in price since last summer.

– But as you can see in the chart above, prices are rising again recently.

– NAR uses median prices because they say average prices are skewed higher by a small share of high-priced sales.

– This downward price trend might give relief to buyers even as inflation keeps rates high.

Rates as of now are 6.875%.

– Existing homes typically remained on the market for 18 days, and 74% of them sold within a month.

– This means low inventory is still causing a lot of competition in the housing market.

– First time buyers were 28% of sales, cash buyers were 25% of sales, and individual investors or second home buyers were 15% of sales.


– Speed of sales — May deals closed in 18 days — suggests consistent demand for low inventory.

Organized, pre-approved buyers can compete in this market.

– Monthly cost on a $396,100 home purchase with 5% down and today’s 6.875% rate is $3228 (mortgage payment, insurance, taxes, mortgage insurance).

– If you had no other monthly debt, you’d need to make $90k* per year to qualify for this.

– If you had $600 in credit card, auto, and other monthly debt, you’d need to make $107k* per year to qualify.

– Buyers holding for a home price crash may not see that because of buyer demand and low inventory.

This might be the best this cycle gets for 2 reasons.

First, demand will rise as stubbornly high inflation wanes and mortgage rates follow.

– May CPI inflation is down to 4.1%, but Core CPI stayed stubbornly high at 5.3%.

– Rates will follow inflation down as the Fed remains committed to beating inflation.

– Housing demand will rise as rates fall, and this will challenge affordability.

Second, despite weaker home sales in the past 16 months, the MBA predicts home sales will rise later this year and next year.

– Here’s the chart showing that trend. If home sales increase like this, home prices may rise again.

MBA predicts existing home sales, new home sales, housing starts recover in second half of 2023 after starting weaker - The Basis Point

Please reach out with questions.


Newly built home prices $420,800 to start summer 2023. Can you afford this?

Rent In CPI Still Too Damn High, But Inflation (and Rents!) Dropping

Existing Home Sales Edged Higher by 0.2% in May (NAR)

* To arrive at these qualifying income numbers, The Basis Point uses 43% deb-to-income ratio that Federal regs allow for all mortgages of this size in America. We use Mortgage News Daily for rates.




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