Existing Home Sales Continue Spiraling, Prices Rise “Too Sharply” Too Quickly
Inventory was up in June, but days on market were down
As the housing market continues to cool, existing home sales fell in June for the fifth consecutive month. The seasonally adjusted sales rate for existing homes fell 5.4% month over month to a seasonally adjusted annual rate of 5.12 million, according to a report from the National Association of REALTORS® released Wednesday.
The sales pace is down 14.2% compared to a year ago.
“Falling housing affordability continues to take a toll on potential home buyers,” said Lawrence Yun, NAR’s chief economist, according to a statement. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
Despite large mortgage rate increases by the Federal Reserve in June, the median sales price of existing homes continued to rise. In June, the median sales price was up 13.4% year over year to $416,000, a new record capping off 124 consecutive months of increases.
One benefit to the slower sales pace is an increase in inventory of unsold homes, which rose to 1.26 million at the end of June, a month over month increase of 9.6%. At the current sales pace, it’s equivalent to 3 months of supply.
While experts agree the market is slowing, one factor complicating the picture is a month over month decrease in the average number of days a property remained on the market. In June, properties remained on the market for an average of 14 days, down from 16 in May and 17 a year ago. The 14 days on market average is the lowest since NAR began tracking the statistic in May 2011. Additionally, 88% of homes sold in June had been on the market less than a month.
“Finally, there are more homes on the market,” Yun added. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
Regionally, existing home sales were unchanged from May in the Northeast (1.5%), but fell in the South (6.2%), Midwest (1.6%) and the West (11.1%). Compared to a year ago, every region saw a decrease in existing home sales, with the West seeing the largest decrease at 21.3%.
“It seems likely that we will return to a pace of home sales more consistent with pre-pandemic levels, but we also see long-term demographic trends which will continue to keep demand for homeownership growing over the next decade,” said Ruben Gonzalez, the chief economist at Keller Williams, according to a statement.