US home sales tumble in June as prices hit new highs
Sales of previously occupied U.S. homes slowed for the fifth consecutive month in June as rising mortgage rates and rising prices kept many home hunters on the sidelines.
Sales of existing homes fell 5.4% last month from May to a seasonally adjusted annual rate of 5.12 million, the National Association of Realtors said Wednesday.
That’s less than the 5.37 million home sales that economists were expecting, according to FactSet. Sales fell 14.2% from June last year.
After hitting an annual rate of 6.49 million in January, sales fell at the slowest rate since June 2020, near the start of the pandemic, when they ran at an annualized rate of 4.77 million homes. . Excluding the pandemic-related slowdown, June sales were at the slowest pace since January 2019.
Although home sales slowed, home prices continued to climb in June. The national median home price jumped 13.4% in June from a year earlier to $416,000. That’s an all-time high based on data dating back to 1999, NAR said. Despite this increase, house prices are not rising as much as at the start of the year.
“With each passing month, it seems that price appreciation is less strong than previous months,” said Lawrence Yun, chief economist at NAR.
The June sales report is belated evidence that the housing market, a key driver of economic growth, is slowing as homebuyers grapple with significantly higher mortgage rates than a year ago.
“A combination of higher prices and higher mortgage rates has clearly changed the dynamics of the housing market,” Yun said. “Home sales will only start to stabilize when mortgage rates start to stabilize.”
The average rate on a 30-year fixed-rate home loan jumped to 5.51% last week, according to mortgage buyer Freddie Mac. A year ago, it averaged 2.88%.
Mortgage rates rose in response to a sharp rise in 10-year Treasury yields, reflecting expectations of higher interest rates across the board as the Federal Reserve raises its benchmark rate in a bid to quell inflation. highest inflation in decades.
Even with higher mortgage rates hurting affordability, sold homes didn’t last long on the market. On average, homes sold in just 14 days after hitting the market last month, the fastest pace of sales tracked by the NAR. It was 16 days in May. Before the pandemic, homes typically sold more than 30 days after they went on sale.
Home hunters able to handle the impact of rising mortgage rates had a greater choice of homes to choose from last month, at least. The number of properties for sale jumped 9.6% from May to 1.26 million, and rose 2.4% from June last year, the first annual increase in three years, Yun said.
Yet at the current rate of sales, the level of properties for sale equates to a 3 month supply, the NAR said. That’s up from 2.6 months in May and 2.5 months a year ago. This is still below the 5-6 month supply which reflects a more balanced market between buyers and sellers.
Despite the still tight supply of homes for sale, rising mortgage rates and prices, first-time buyers accounted for 30% of sales last month, NAR said. That’s up from 27% in May, but still low by historical standards, when first-time buyers accounted for up to 40% or more of transactions.
Real estate investors and other buyers able to buy a home with just cash, avoiding the need to rely on financing, accounted for 25% of all sales last month, NAR said.
By Alex Veiga
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