Existing homes market facing challenges as sales decline, inventory rises, and prices hit record highs.
The latest data from the National Association of Realtors (NAR) for June shows a 5.4% year-over-year and month-over-month decrease in existing-home sales, dropping to a seasonally adjusted rate of 3.89 million. The median sales price also surged by 4.1% year over year, reaching an all-time high of $426,900 for the second consecutive month.
This has led to a significant increase in unsold inventory, pushing the months of supply to 4.1, the highest level since May 2020 during the early days of the COVID-19 pandemic. The 3.1% rise from May and a substantial 23.4% increase year over year indicate the challenges in the housing market.
With mortgage rates remaining around 7%, buyers are holding off on purchases, anticipating a potential rate cut by the Federal Reserve in September.
“We’re witnessing a transition from a seller’s to a buyer’s market,” stated NAR chief economist Lawrence Yun. “Homes are staying on the market longer, receiving fewer offers, and inventory is rising nationally.”
Regional trends mirror the national data, with the Northeast experiencing a 6% sales decline and a 9.7% price increase. In the South, sales were down by 5.9% while prices saw a 1.7% rise. Sales in the West dropped by 2.6% with prices increasing by 3.5%.
However, the Midwest presents contrasting data, showing a 6.1% decrease in existing home sales and a 9.7% price increase year over year. Meanwhile, the latest report from the U.S. Census Bureau revealed a 13.3% surge in new home sales in the Midwest.
“The decline in sales highlights ongoing affordability challenges,” said Zillow senior economist Orphe Divounguy. “As inflation eases, mortgage rates may decrease slightly, potentially boosting late-season home buying activity.”
“While there is more inventory available, rising home prices are pricing out many potential buyers,” noted Bright MLS chief economist Lisa Sturtevant. “Some buyers are waiting for lower mortgage rates, which are increasingly likely with inflation moderating and a strong job market.”
Related