US Home Sales Hit Slowest Pace Since Last Year
In June, sales of previously owned homes in the U.S. dropped to their slowest level since last September, largely due to rising mortgage rates and record-high median sales prices.
The National Association of Realtors reported that existing home sales fell by 2.7%, bringing the seasonally adjusted annual rate to 3.9 million units since last May.
When compared to last June, sales remained flat.
Recent data from Factset indicates that the latest home sales figures did not meet the expected 4.01 million pace projected by economists.
Interestingly, home prices have increased annually for 24 consecutive years. In June, the median national sales price rose by 2% from the previous year, reaching a staggering $435,300—the highest on record.
The U.S. housing market has essentially been in a recession since early 2022, when mortgage rates began to increase from their pandemic lows.
Last year’s home sales hit their lowest levels in nearly three decades.
Currently, the average 30-year mortgage rate hovers around 7%, according to Freddie Mac.
The homes sold last month likely signed contracts in May and June, a period when the average 30-year mortgage rate fluctuated between 6.76% and 6.89%.
High mortgage costs can substantially increase monthly payments for borrowers, restricting their purchasing power. This dynamic is a significant factor contributing to a sluggish spring homebuying season.
“What transpires with mortgage rates will really shape the second half of the year,” noted Lawrence Yun, chief economist at NAR.
Affordability issues are restricting the actions of first-time buyers, who represented only 30% of sales last month—unchanged since May. Historically, they made up about 40% of the market.
Those who can manage the current mortgage rates or buy homes outright are finding opportunities, as there are more properties becoming available.
At the end of last month, the inventory reached 1.53 million homes, which is a slight decrease of 0.6% from May but nearly a 16% increase compared to last June. However, this number is still well below the typical 2 million homes available before the pandemic.
The inventory at the end of June will adjust from a 4.6-month supply at the end of May to a 4.7-month supply, given the current sales pace.
Ideally, a balanced market between buyers and sellers is thought to have a supply of around 5 to 6 months.
With sales continuing to be low, homes are taking longer to sell. The NAR reported that homes remained on the market for an average of 27 days last month, compared to 22 days in June of the previous year.
