Sales of previously owned homes in the U.S. fell by more than expected in June, the fifth straight monthly decline, to the lowest level since June 2020, the National Association of Realtors said Wednesday.
Economists had forecast around a seasonally adjusted annual rate of 5.4 million sales. Instead, they fell by 5.4 percent to 5.12 million.
Compared with a year ago, home sales were down 14.2 percent.
“Falling housing affordability continues to take a toll on potential home buyers,” said NAR Chief Economist Lawrence Yun. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
Interest rates have moved up dramatically over the past year alongside home prices, putting home purchases out of reach for some would-be buyers and convincing others to hold off on purchases. Some owners may be reluctant to sell a home with a lower mortgage rate knowing they will have to pay the higher rate on a new home.
According to Freddie Mac, the average interest rate for a 30-year, conventional, fixed-rate mortgage was 5.52 percent in June, up from 5.23 percent in May. A year ago, the average rate was 3.15 percent. Currently, the average is 5.78 percent.
“If consumer price inflation continues to rise, then mortgage rates will move higher,” Yun said. “Rates will stabilize only when signs of peak inflation appear. If inflation is contained, then mortgage rates may even decline somewhat.”
The median price rose to a new record high of $416,000. That is a 13.4 percent gain from a year ago, indicating a slowdown in the rate of inflation for home prices. The year-over-year gains are likely to come down in the second half of this year but few economists expect an outright decline in home prices, except perhaps in some of the priciest markets. Yun has said he expects price gains to slow to around five percent this year and perhaps lower next year.
Single-family home sales fell to a seasonally adjusted annual rate of 4.57 million in June, down 4.8 percent from a month ago and 12.8 percent from a year ago. The median existing single-family home price was $423,300 in June, up 13.3 percent from June 2021.
There was some relief when it comes to the inventory of homes for sale. Compared with May, the number of homes on the market rose 9.6 percent. Compared with a year ago, the number of homes on the market is up 2.4 percent, the first year-over-year gain in three years.
Homes sales are still incredibly brisk. On average, a home remained on the market for 14 days, down from 16 days in May. Before the pandemic, it was typical for a home to remain on the market for a month or so.
“Finally, there are more homes on the market,” Yun added. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
Sales were down in the West, South, and Midwest. In the Northeast, sales were unchanged.
COMMENTS
Please let us know if you're having issues with commenting.