Existing home sales fell in June for the fourth month in a row as median sales prices hit record levels, bad news for the housing market and the broader economy.
Existing home sales in June fell a notable 5.4% to a seasonally adjusted annual rate of 3.89 million, the National Association of Realtors reported on Tuesday, as higher mortgage rates and home prices priced out many would-be buyers and led many homeowners to avoid selling and having to reenter the home loan market.
The median price of an existing home in June was $426,900, an all-time high and an increase of 4.1% from the year before. Additionally, homes typically remained on the market for 22 days in June, down from 24 days in May.
“Even as the median home price reached a new record high, further large accelerations are unlikely,” NAR Chief Economist Lawrence Yun said. “Supply and demand dynamics are nearing a balanced market condition. The months supply of inventory reached its highest level in more than four years.”
The overall rate of home sales was down 5.4% from the year before.
Total housing inventory at the end of June was 1.32 million units, up 3.1% from May and 23.4% from a year ago.
“We're seeing a slow shift from a seller's market to a buyer's market,” Yun added. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
Tuesday's report illustrated the affordability crisis facing families today. Too-high mortgage rates and house prices have put home buying out of reach for many people.
As of this week, the average rate on a 30-year, fixed-rate mortgage was nearly 6.9%, according to Mortgage News Daily, which tracks daily changes in rates. That is down from a recent peak of above 8%, although is still far higher than in the years prior to the pandemic.
The combination of the higher mortgage rates with the higher home prices has dampened demand for real estate.
“The housing bubble continues with single-family existing home prices up 2.4% in June to a record $432,700, making it even more [unaffordable] for inflation-weary consumers looking for a new home,” said Chris Rupkey, chief economist at FWDBONDS. “The housing price bubble has not popped yet, but buyers are starting to grow cautious about buying homes at record highs.”
New home sales in May fell 11.3% from April to a seasonally adjusted annual rate of 619,000, according to the most recent report from the Census Bureau. The number of new home sales is 16.5% lower than it was in May of last year.
The latest new home sales data for June are set to be released Wednesday morning. Most economists expect new home sales to have increased.
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The difficult housing market is also bad for Democrats in a contentious election year. President Joe Biden has been blamed by many voters for the highest inflation in decades, and Vice President Kamala Harris, who is now the likely presidential nominee for Democrats, could be weighed down by voter perceptions of the Biden administration.
Republicans, meanwhile, including former President Donald Trump, will likely work to tie Harris to Biden’s policies.
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