August brought a clear cooling in the housing market, with sales falling 14.4 percent from the previous year. This marked the sharpest drop since January 2021 and intensified a multi month slowdown driven by higher borrowing costs and rising interest rates.
New data from the National Institute of Statistics shows 49,252 housing transactions in August, a slight improvement of about two percent from July. Yet the year so far is tracking a 6.5 percent decline in total transactions when compared to the prior year.
The year ended December with a double digit drop in sales, but January offered a brief respite with a 6.6 percent uptick. February mirrored that downward momentum, followed by a 5.7 percent fall in March and a larger 8.1 percent decline in April. May and June saw a correction of 6.4 percent, while July deepened the downturn by 10.5 percent. August extended the losses to 14.4 percent, continuing a challenging trend for buyers and sellers alike.
Second-hand home purchases faced the steepest drop
In August, the second-hand market remained the dominant segment, accounting for almost 81 percent of total transactions. However, activity slowed to 39,827 deals, down 15.9 percent from August of the previous year. This marked the largest annual decline since January 2021.
New home transactions also fell by 7.3 percent on an annual basis, totaling 9,425 operations, with nine of the last twelve months recording negative rates. Overall, second-hand housing transactions fell 7.5 percent for the year, while new housing transactions contracted by 2 percent.
Free market housing represented more than 92 percent of total activity, recording 45,615 transactions in August, down 14.5 percent from the prior year. Subsidized housing accounted for 3,637 transactions, a 13.9 percent year-on-year decrease.
Month over month gains driven by new housing
Compared with July, purchases and sales rose by 2 percent, aided by a substantial 14 percent rise in new home sales. Second-hand housing transactions, however, continued to ease, slipping 0.5 percent from the prior month.
Regional variations show steep declines in the Balearic Islands, Canary Islands and Madrid
Among autonomous communities, August year-on-year declines hit 15 percent. The Balearic Islands saw a 37.7 percent drop, the Canary Islands 25.6 percent, and Madrid 22.9 percent. Catalonia posted a 17.1 percent decrease, Andalusia 16.5 percent, Aragon 16.3 percent, and the Basque Country 15.6 percent.
Two regions bucked the trend with increases: Navarra up 8.7 percent and Asturias up 3.7 percent.
Property records for August showed 166,982 properties registered, down 7.3 percent from the prior year. Overall, purchases and sales fell 11.5 percent to 93,917 transactions, while donations declined 4.8 percent to 3,692 units. Other operations, including land consolidations, horizontal divisions, due dates, mortgage foreclosures, and judgments, totaled 29,305, down 5.9 percent. Conversely, exchanges rose 46.8 percent to 543, and inheritance transactions increased 2.4 percent to 39,525.
These patterns reflect the evolving balance between supply and demand across regions, with ongoing adjustments as the market absorbs higher financing costs and shifting lender criteria. Cited: INE statistics and regional reports