Demand for previously owned homes in the United States has cooled once more, caught between persistently high mortgage rates and record-high property prices.
Data released on Thursday from the National Association of Realtors (NAR) showed that sales of existing homes in June fell by 2.4% from the previous month, missing market expectations and highlighting that housing affordability remains a primary factor suppressing buyer demand.
The seasonally adjusted annual rate of existing-home sales in June was 4.09 million, a 2.4% decrease from May and below the modest increase anticipated by the market. However, compared to the same period last year, sales in June were still up by 2.8%.
NAR's chief economist, Lawrence Yun, noted that recent existing-home sales have been volatile, influenced by minor fluctuations in mortgage rates, reflecting buyer sensitivity to changes in affordability. He added that robust job growth this year, with over 500,000 new jobs added, continues to provide some support for the housing market.
The reported data primarily reflects completed transactions for which contracts were mostly signed in May. During that period, the 30-year fixed mortgage rate was still in an upward trend, having climbed since the escalation of tensions in the Middle East in March, placing pressure on homebuying demand.
On the supply side, the inventory of existing homes stood at 1.56 million units by the end of June, down 0.6% from May but up 1.3% from a year ago. At the current sales pace, this represents a 4.6-month supply, still below the 6-month level typically considered a balanced market.
With supply remaining tight, home prices continued their ascent. The median existing-home sales price in June rose to $440,600, a 1.8% year-over-year increase, setting a new record high. June is typically both a peak sales season and the strongest month for price performance in the US housing market.
Yun stated that if the stagnation in supply growth persists, it will constrain long-term improvements in housing affordability. Insufficient inventory could drive prices even higher, making increasing the housing supply crucial for improving homeownership opportunities.
Breaking down the market by price segment, the high-end sector continues to show the most strength. Sales of homes priced under $100,000 fell by 1.7% year-over-year, while sales of homes priced between $100,000 and $250,000 saw less than 1% growth. In contrast, sales of homes priced between $750,000 and $1 million surged by nearly 14%, and sales of homes priced over $1 million jumped by 18%.
Regionally, existing-home sales increased month-over-month in the Northeast but declined in all other regions.
Additionally, all-cash sales accounted for 25% of transactions, down from 29% a year ago. First-time buyers made up 33% of sales, up from 30% last year, indicating some improvement in demand from new entrants, though the overall market remains constrained by the dual pressures of high interest rates and elevated prices.
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