Sinking sales, rapidly rising inventory and prices at all-time highs — this is the state of the market for existing homes.
That’s according to June’s existing-home sales data from the National Association of Realtors (NAR), which reflect the problems that have hampered housing markets since mortgage rates began to rise in 2022.
Sales of existing homes in June fell 5.4% year over year and month over month to a seasonally adjusted rate of 3.89 million. That’s the highest rate of decline so far this year. The median sales price jumped 4.1% year over year, hitting a new all-time high ($426,900) for the second month in a row.
These two factors have caused unsold inventory to rise considerably, pushing months of supply to 4.1, the highest number since the early days of the COVID-19 pandemic in May 2020. It represents a 3.1% rise compared to May and a whopping 23.4% year-over-year increase.
With mortgage rates still hovering around 7%, economists believe buyers are waiting out the next few months until the Federal Reserve cuts benchmark rates, which is expected in September.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” NAR chief economist Lawrence Yun said in a statement. “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.”
The yearly regional trends don’t differ much from the national one. Sales in the Northeast were down 6% and prices were up 9.7%. In the South, sales were down 5.9% and prices rose 1.7%. Sales in the West dropped 2.6% and prices rose 3.5%.
There is juxtaposed data in the Midwest. Year over year, sales of existing homes dropped 6.1% while prices rose 9.7%. But the U.S. Census Bureau‘s most recent report on new homes showed that sales in the Midwest jumped 13.3%.
“The decrease in sales is a stark reminder that affordability is still a challenge,” Zillow senior economist Orphe Divounguy said in a statement. “Looking ahead, inflation easing faster than previously anticipated should help to bring mortgage rates down slightly from the Spring highs, potentially supporting a late season rebound in home buying activity.”
“There is more inventory out there to choose from now, but a big difference is that home prices in most markets are higher than they were a year ago and more prospective homebuyers are simply priced out,” Bright MLS chief economist Lisa Sturtevant said in a statement.
“Some prospective buyers are simply waiting for mortgage rates to come down. With inflation cooling and the job market still solid, rate cuts are now almost a foregone conclusion, which means those buyers who can wait are doing so.”
