Home Sales Are Down Almost 19% Annually. Should You Sell Yours ASAP?

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Home sales have been on a decline. Read on to see what that means for your plans to sell. 

In 2020 and 2021, homeowners were in a prime position to sell. Not only were property values sky-high, but mortgage rates were super low. That made it so sellers could walk away with large profits and use their equity to upsize without taking on horrendously high mortgage payments in the process.

But today’s borrowing environment is very different. Mortgage lenders are charging a lot more interest these days than they were a couple of years ago. As such, buyers have been retreating from the market due to issues with affordability.

In June, existing-home sales fell 3.3% from May, according to the National Association of Realtors (NAR). On a year-over-year basis, they were down 18.9%.

Given this drop in buyer demand, you may be inclined to sell your home ASAP, before its value plunges. But selling your home right now is a move that might backfire on you financially.

The problem with selling a home today

If you’re able to sell your home today and walk away with enough of a profit to buy a new place mortgage-free, then doing so makes sense. That’s because home prices are still elevated. And so if you’ve been looking to downsize, then a near-term sale could make sense. While you might pay up a bit for a replacement home, the profit you score on your current home might more than make up for it.

But if you expect to need a new mortgage following the sale of your home, then selling right now is a move that could hurt you. Chances are, the interest rate you’re paying on your mortgage at present is considerably less than what you’d be looking at with a new loan. You might struggle to find a replacement home that’s affordable, even if you’re able to command a nice price for the home you’re selling.

Will waiting put you in a bad spot?

Given that home sales are on the decline, you may be eager to sell your home before its market value drops. But home values are likely to hold steady and remain high for the foreseeable future for one big reason: a glaring lack of inventory.

As of June, there was only a 3.1-month supply of available homes on the real estate market, says the NAR. For context, it typically takes a good 4- to 6-month supply of homes to meet buyer demand in full.

We’re also unlikely to see a notable uptick in housing inventory in the coming months due to mortgage rates being as high as they are. Sellers aren’t particularly motivated to list their homes now because they know that doing so might mean giving up a 3% mortgage rate and getting stuck with close to 7% instead.

As such, despite dropping home sales, there’s really no need to rush to sell your home. And waiting could be a better choice financially.

Remember, if you’re able to get more for your home by selling today, then so will another seller. So once again, unless you’re looking to downsize, selling your home and buying another with a mortgage might prove to be far more expensive than you bargained for.

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