Existing-Home Sales Dip in June as Prices Reach All-Time High

Sales of previously owned homes in the United States fell in June after a rebound in May, bringing the spring home-selling season to a disappointing close as buyers continued to grapple with high mortgage rates and record home prices.Existing-home sales fell 2.4 percent from May to a seasonally adjusted annual rate of 4.09 million, the National Association of Realtors reported Thursday. Economists had expected a moderate month-over-month gain.Compared with a year earlier, however, sales were up 2.8 percent.The Northeast was the only region to record an increase in sales in June, while activity declined in the Midwest, South, and West, according to the report. Compared with a year ago, sales rose in every region except the Northeast, where they were unchanged.Existing-home sales are counted when a transaction closes, meaning the June figures largely reflect contracts signed in April and May, when mortgage rates surged following the outbreak of the war in the Middle East. The average rate on a 30-year fixed mortgage still hovers in the mid-6 percent range.“The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions,” NAR Chief Economist Lawrence Yun said in a release.“However, job gains—more than half a million since the beginning of the year—will continue to provide support for the housing market.”Housing inventory also slipped during the month. There were 1.56 million existing homes on the market at the end of June, down 0.6 percent from May but up 1.3 percent from a year earlier.At the current sales pace, that roughly translates to a 4.6-month supply of homes, up slightly from 4.5 months in May and unchanged from a year ago. Generally, a 4- to 6-month supply is considered a balanced market where neither home buyer nor home seller has an edge.Even with sales slowing, home prices continued to rise. According to the NAR, the median price of an existing home sold in June reached a record $440,600, up 1.8 percent from a year earlier and marking the 36th consecutive month of year-over-year price increases.First-time buyers accounted for 33 percent of sales in June, down from 35 percent in May but up from 30 percent a year earlier. The relatively low share underscores the affordability challenges facing entry-level buyers, who generally do not have proceeds from the sale of another home to help finance a down payment.“Without consistent gains in inventory, home prices can accelerate,” Yun said. “It is critical to introduce more supply to the market to widen the opportunity for homeownership.”Regionally, the Northeast posted the largest year-over-year price increase, with the median price rising 3.9 percent to $564,800, according to the NAR.The median price in the Midwest climbed 2.7 percent from a year earlier to $346,600. Prices in both the South and West rose 0.9 percent, reaching $377,700 and $633,600, respectively.The latest housing data come as a sweeping bipartisan housing affordability bill sits on President Donald Trump’s desk.The 21st Century ROAD to Housing Act cleared Congress in June with overwhelming support, passing the Senate 85–5 and the House 358–32. The measure includes, among other things, a ban on institutional investors that own at least 350 single-family homes to buy additional existing homes, with exceptions of those purchasing or building new single-family homes specifically for the rental market.Supporters in Congress have argued that the restriction is necessary to prevent large corporate landlords from outbidding families and accumulating large shares of local housing markets. Critics, however, have warned that restricting institutional purchases could actually reduce the supply of homes that might otherwise be renovated and returned to the market as rentals.The housing bill is on track to automatically become law on Friday without the signature of Trump, who pressed Congress to first pass the SAVE America Act, his priority legislation to tighten requirements in federal elections. He could still veto the bill before then.