The housing market in the United States experienced a further slowdown in June, with sales of previously owned homes dropping to their lowest level since December. The National Association of Realtors reported a 5.4% decline in existing home sales last month, reaching a seasonally adjusted annual rate of 3.89 million. This marks the fourth consecutive month of decreases and a 5.4% drop compared to June of the previous year.
Despite the decline in sales, home prices continued to rise, marking the 12th consecutive month of year-over-year increases. The national median sales price reached an all-time high of $426,900, up by 4.1% from the previous year. This price surge occurred even as the supply of homes on the market increased to its highest level since May 2020.
There were approximately 1.32 million unsold homes by the end of June, representing a 3.1% increase from May and a 23% rise from the same period last year. This increase in inventory has led to a 4.1-month supply at the current sales pace, slightly below the 4- to 5-month supply considered balanced between buyers and sellers.
While the housing market remains tight, the recent uptick in available homes suggests a potential shift in favor of buyers. Sellers are still benefiting from the current market conditions, with homes selling within an average of 22 days after listing. Additionally, 29% of properties sold for more than their original list price, indicating competitive bidding among buyers.
Chief economist Lawrence Yun noted that while inventory has increased, sales have not yet seen a corresponding rise. The housing market has been facing challenges since 2022 when mortgage rates started to climb from pandemic-induced lows. Last year, existing home sales hit a nearly 30-year low as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%.
Throughout this year, mortgage rates have remained around 7%, more than double the rate from three years ago. Economic strength and inflation concerns have led the Federal Reserve to maintain its short-term rate at levels not seen in over two decades, impacting the housing market dynamics.
