The recent recovery momentum in the U.S. existing-home market has been interrupted. Weighed down by persistently high mortgage rates, sales of previously owned homes declined month-over-month in June, with housing affordability remaining the central constraint on buyer demand.
Data released by the National Association of Realtors (NAR) on Thursday showed the annualized sales pace for existing homes fell to 4.09 million units in June, down 2.4% from May and below the median forecast of 4.20 million units from economists surveyed by Bloomberg. Concurrently, the median sales price for existing homes rose 1.8% year-over-year to reach a record high of $440,600.
Lawrence Yun, NAR's chief economist, stated, "The monthly existing-home sales figures are fluctuating with minor changes in mortgage rates, reflecting how sensitive homebuyers are to affordability conditions." He also noted that ongoing job market growth should provide underlying support for the housing market.
This sales decline breaks a multi-month uptrend in the U.S. existing-home market. Currently, the average rate on a 30-year fixed mortgage is hovering around 6.6%. While the NAR's Housing Affordability Index has seen slight improvement compared to a year ago, it remains at its lowest level since August 2025.
Sales Under Broad Pressure, Southern Region Leads Decline
Regional performance varied significantly, with the South, the nation's largest existing-home sales market, being the hardest hit. Annualized sales in the Southern region fell 3.6% to 1.89 million units in June, a steeper drop than the national average.
Sales also declined in the Midwest and West regions, with only the Northeast posting a gain.
Participation from first-time buyers also contracted. The share of first-time buyers in total sales dipped to 33% in June from 35% in May, reflecting the ongoing affordability squeeze on entry-level homebuyers.
Inventory Gains Remain Muted as Prices Set New Record
The inventory situation for existing homes offered little relief. The number of homes for sale in June was 1.56 million, a 1.3% increase from a year earlier but marking the first small monthly decline this year. Lawrence Yun characterized this year-over-year gain as "insignificant."
"We need to see 30%, 40% increases," he said, "but we are not seeing that at all."
Meanwhile, price pressures have not abated. The record median sales price of $440,600, while up 1.8% year-over-year, represents a much slower pace of growth compared to two years ago, indicating a clear deceleration in upward price momentum.
Interest Rate Impasse Persists, Casting Doubt on Recovery Outlook
The core issue remains interest rates. Mortgage rates around 6.6% are deterring a large pool of potential buyers. It remains to be seen whether the previous uptick in pending home sales—a leading indicator for closings by one to two months—can be sustained.
Lawrence Yun expressed optimism about the job market, believing that sustained employment growth will provide a floor for housing demand.
However, until the path for interest rates becomes clearer, affordability pressures are expected to continue dominating market trends, leaving the prospect of a substantial recovery in existing-home sales highly uncertain.
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