Home prices reached an all-time high in June, even as the nation's housing slump continues with fewer people buying homes last month due to an affordability crisis.
The national median sales price rose 4.1% from a year earlier to $426,900, the highest on record going back to 1999. At the same time, sales of previously occupied U.S. homes fell in June for the fourth straight month as elevated mortgage rates and record-high prices kept many would-be homebuyers on the sidelines.
Sales of previously occupied U.S. homes fell 5.4% last month from May to a seasonally adjusted annual rate of 3.89 million, the fourth consecutive month of declines, the National Association of Realtors (NAR) said Tuesday. Existing home sales were also down 5.4% compared with June of last year.
The latest sales came in below the 3.99 million annual pace economists were expecting, according to FactSet.
All told, there were about 1.32 million unsold homes at the end of last month, an increase of 3.1% from May and up 23% from June last year, NAR said. That translates to a 4.1-month supply at the current sales pace. In a more balanced market between buyers and sellers there is a 4- to 5-month supply.
Signs of pivot
While still below pre-pandemic levels, the recent increase in home inventory suggests that, despite record-high home prices, the housing market may be tipping in favor of homebuyers.
"We're seeing a slow shift from a seller's market to a buyer's market," said Lawrence Yun, chief economist at the National Association of Realtors. "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."
For now, however, sellers are still benefiting from a tight housing market.
Homebuyers snapped up homes last month typically within just 22 days after the properties hit the market. And 29% of those properties sold for more than their original list price, which typically means sellers received offers from multiple home shoppers.
"Right now we're seeing increased inventory, but we're not seeing increased sales yet," said Yun.
As prices climb, the prospect of owning a home becomes a greater challenge for Americans, particularly first-time buyers, some of whom are opting to sit things out.
"High mortgage rates and rising prices remain significant obstacles for buyers," Rubeela Farooqi, chief U.S. economist at High Frequency Economics said in a note. "But ongoing relief on the supply side should be positive for home sales as will be an eventual decline in borrowing costs as the Fed starts to lower rates later this year."
Nancy Vanden Houten, senior economist at Oxford Economics, echoes that optimism.
"The increase in supply may support sales as mortgage rates move lower and may lead to some softening in home prices, which at current levels, are pricing many buyers out of the market," Vanden Houten said in a note on the latest home sale data.
The U.S. housing market has been mired in a slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.
The average rate has mostly hovered around 7% this year — more than double what it was just three years ago — as stronger-than-expected reports on the economy and inflation have forced the Federal Reserve to keep its short-term rate at the highest level in more than 20 years.
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