A persistent lack of homes for sale combined with strong home-buying demand pushed home prices up in June to the highest level in a year.
The total number of homes for sale in June fell by 13.6% from last June, to 1.08 million units.
Sales of previously owned homes fell by 3.3% to an annual rate of 4.16 million in June, according to the National Association of Realtors.
Slowest Pace in Six Months
Homes were sold at the slowest pace in six months since January 2023. Additionally, the 4.16 million number is also the slowest rate of homes sold for the month of June since 2009, during the sub-prime lending crisis.
The drop in sales fell short of economists’ expectations, who had forecasted existing-home sales to total 4.2 million in June. Compared to June 2022, home sales are down by 18.9%.
The median price for an existing home in June was $410,200, which is the second-highest price that the NAR has recorded since it began tracking the data in 1999.
Home prices peaked in June last year, when the median price of a resale home hit $413,800.
The number of homes on the market remained flat in June at 1.08 million units.
Homes listed for sale remained on the market for 18 days on average, unchanged from the previous month. Last June, homes were only on the market for 14 days.
Housing Market Update
Sales of existing homes across the country were mixed in June. While the Northeast saw a 2% increase in home sales, other regions experienced either flat or declining sales.
Snapshot of the Market
- All-cash buyers accounted for 26% of sales.
- Individual investors or second-home buyers made up 18% of purchases.
- First-time home buyers were responsible for 27% of transactions.
The housing market has made a significant recovery, but with record-low inventory levels, the question arises whether this growth is sustainable.
Homeowners have been hesitant to sell their properties due to mortgage rates hovering around 7%.
Builders have responded to the shortage of available homes by increasing their construction efforts. However, this may not be enough to alleviate the shortage.
Additionally, home prices have reached near-record highs, making homeownership unaffordable for many Americans.
Insights from Realtors
Lawrence Yun, chief economist at the National Association of Realtors, commented on the current market conditions: “It is a tough market to be a buyer in the current environment.” Yun emphasized that the lack of homes for sale remains a significant challenge. Even if the inventory were to double, Yun believes the market could easily absorb it.
Buyers continue to face competition, with one-third of homes selling above their list price.
In early trading on Thursday, stock prices showed mixed performance. The Dow Jones Industrial Average (DJIA) rose by 0.60%, while the S&P 500 (SPX) experienced a slight decline of 0.19%. Meanwhile, the yield on the 10-year treasury note surpassed 3.8%.