House sales in Spain continued to decline in July, with the year-over-year rate dropping to 10.5 percent. This marked six consecutive months of decreases and brought total operations to 48,303, the lowest monthly figure since 2020. Higher financing costs, driven by rising interest rates, have cooled buying activity in the market.
On a month-to-month basis, July sales were down 10.5 percent from June, and a year-to-date figure shows a 5.3 percent drop in transactions so far this year, according to INE data.
The market continues to see second-hand homes as the most common type of sale, accounting for roughly 83 percent of transactions. These sales fell by 11.2 percent when compared with July of last year, while new constructions declined by 7.4 percent in the same period.
Healthy market indicators
Despite the softer numbers, housing price growth is still observable, and real estate portals have described the market as being in a healthy, normalizing phase rather than showing signs of distress.
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A spokesperson for Idealista, Francisco Iñareta, noted that the data show a significant drop from 2022, a record year, and that July data point to a trend toward normalization. He cautioned against reading the figures as a disaster scenario.
Fotocasa Research Director Maria Matos highlighted the new housing data, which showed an annual decline for the first time this July. Still, the expert emphasized that the market is seeing a robust boom in new construction since the start of the pandemic and expected the year to close with sales near 500,000.
When might prices ease further?
Pisos.com Research Director Ferran Font noted that the data continue to confirm cooling expectations for 2023, while acknowledging that forecasts remain in flux. Time will tell when any slowdown will be clearly reflected in prices.
Economics reporter Sandra López Letón discussed the topic on a recent episode. Her analysis of the current buying climate suggests that rising mortgage costs may delay purchases for some buyers. For those considering a purchase, waiting a bit longer could be advisable in light of the current pricing dynamics. Looking ahead to the rest of the year and into 2024, there is a possibility that prices may ease, though rapid, broad-based price cuts are unlikely and any declines are expected to be gradual and selective.