The sale of existing homes fell by 5.4 percent in June compared to May, amid the median sales price hitting the “highest price ever recorded,” according to a July 23 press release from the National Association of Realtors (NAR).
The median existing home sales price for June was $426,900. All four U.S. regions—Northeast, Midwest, South, and West—posted sales declines for the month.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR’s chief economist Lawrence Yun. “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.”
Total housing inventory in June was 1.32 million units, up almost a quarter from a year back. Unsold inventory was at 4.1 months’ worth of supply at the current pace of sales. This is the highest level in over four years, Mr. Yun said.
“Even as the median home price reached a new record high, further large accelerations are unlikely,” he added. “Supply and demand dynamics are nearing a balanced market condition.”
Mortgage purchase application demand is around five percent lower than what it was during the Spring despite rates remaining roughly the same, he noted.
Buyers Backing Off
Buyers backed out of deals at a “record rate” last month, according to a report by real estate brokerage Redfin.“Nearly 56,000 home-purchase agreements were canceled in June, equal to 14.9% of homes that went under contract that month—the highest percentage of any June on record.”
Prospective home buyers are finding it difficult to commit to purchasing a home due to “elevated mortgage rates and record-high home prices,” the report stated. It found that mortgage rates remain more than double the all-time low hit during the COVID-19 pandemic.
Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, points out that buyers are getting “more and more selective.”
“They’re backing out due to minor issues because the monthly costs associated with buying a home today are just too high to rationalize not getting everything on their must-have list.”
Some buyers could be waiting for mortgage rates to drop even more, Redfin said. However, Chen Zhao, the economics research lead at the firm, ruled out any more significant rate declines in the coming few months.
A key factor that would push down mortgage rates is the U.S. Federal Reserve cutting down interest rates. However, Fed rate cuts haven’t happened as of yet.
“After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” he said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
Mr. Powell expressed concern that reversing the current tight monetary policy “too late or too little could unduly weaken economic activity and employment.”
