Existing home prices down $25k from June 2022 peak to $388,800. Is this affordable?


Sales of existing homes declined 14 of 15 months through April. Besides rising in February, existing home sales declined in all of the previous 12 months and the 2 months after. Per the latest NAR data, existing home prices are $388,800. Is this affordable? Let’s take a quick look at this and other key stats.


– Annualized sales of existing (as opposed to newly built) homes was 4.28 million for April (annualized, seasonally adjusted).

– This is down 3.4% from March and down 23.2% from one year ago.

– Available inventory of homes to buy is super low at 1.04 million units, but up decently (7.2%) from March.

– Median existing home prices rose $13,400 from $375,400 in March to $388,800 in April.

The $388,800 median home price has dropped $25,000 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.

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

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

Rates as of now are 6.875%.

– Existing homes typically remained on the market for 22 days, and 73% 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 29% of sales, cash buyers were 28% of sales, and individual investors or second home buyers were 17% of sales.


– Speed of sales — April deals closed in 22 days — suggests consistent demand for low inventory.

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

– Monthly cost on a $388,800 home purchase with 5% down and today’s 6.875% rate is $3170 (mortgage payment, insurance, taxes, mortgage insurance).

– If you had no other monthly debt, you’d need to make $88k* per year to qualify for this.

– If you had $600 in credit card, auto, and other monthly debt, you’d need to make $105k* 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.

– April CPI inflation is down to 4.9%, but Core CPI stayed stubbornly high at 5.5%.

– The Fed remains committed to beating inflation, and rates will follow inflation down.

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

Second, despite 14 of 15 months of declines, the MBA predicts home sales will rise in the coming years.

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

MBA predicts exiting home sales and new home sales will rebound in 2H23 and also in 2024 - The Basis Point

Please reach out with questions.


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

5.5% Core CPI way above Fed target. What now?

Existing-Home Sales Dropped 3.4% in April (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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