Existing Home Sales Continued to Pull Back Amid Record High Prices

Existing home sales fell for the fourth straight month in June due to lingering high mortgage rates and record-high prices, according to the National Association of Realtors (NAR). Although low resale inventory continued to push prices to another record high, the months’ supply of inventory continued to increase and reached its highest level since May 2020. Improving inventory and moderating mortgage rates are likely to ease home price growth in the months ahead.

Homeowners with lower mortgage rates have opted to stay put, avoiding trading in for higher rates. This trend is driving home prices higher and resale inventory lower. Eventually, mortgage rates are expected to decrease gradually, leading to increased demand (and unlocking lock-in inventory) in the coming quarters. However, that decline is dependent on future inflation reports.

Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, fell 5.4% to a seasonally adjusted annual rate of 3.89 million in June, the lowest level since December 2023 (as shown below). On a year-over-year basis, sales were also 5.4% lower than a year ago.

The first-time buyer share fell to 29% in June, down from 31% in May but up from 27% in June 2023. The inventory level rose from 1.28 million in May to 1.32 million units in June and is up 23.4% from a year ago.

At the current sales rate, June unsold inventory sits at a 4.1-months supply, up from 3.7-months last month and 3.1-months a year ago. This inventory level remains low compared to balanced market conditions (4.5 to 6 months’ supply) and illustrates the long-run need for more home construction. However, the count of single-family resale homes available for sale is up almost 22.1% on a year-over-year basis, with a 3.6% gain in June.

Homes stayed on the market for an average of 22 days in June, down from 24 days in May but up from 18 days in June 2023.

The June all-cash sales share was 28% of transactions, unchanged from May but up from 26% a year ago. All-cash buyers are less affected by changes in interest rates.

The June median sales price of all existing homes was $426,900, up 4.1% from last year. This marked the highest recorded price for the second consecutive month. The median condominium/co-op price in June was up 2.6% from a year ago at $371,700. This rate of price growth will slow as inventory increases. Existing home sales in June saw a decline across the four major regions (as shown below), ranging from -2.1% in the Northeast to -8.0% in the Midwest. On a year-over-year basis, sales declined in the Northeast (-6.0%), Midwest (-6.1%) and South (-6.9%) as well, while sales in the West remained unchanged.

The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI fell from 72.3 to 70.8 in May, the lowest level on record. On a year-over-year basis, pending sales were 6.6% lower than a year ago per the NAR data.