Existing home sales fell for the fifth straight month as the housing market cooled significantly amid steep rises in mortgage rates and housing prices, the National Association of Realtors reported on Wednesday.
Sales dropped 5.4% in June from a month earlier to 5.12 million on a seasonally adjusted annualized rate—lower than the average sales in 2019 before the pandemic. Sales were down 21% since January and 14.2% from a year ago.
Despite setting a new record high in June, the median price for existing homes was not adjusted for seasonal effect. In fact, median price growth has come down since the beginning of the year on a year-over-year basis to 13.4% from 16.0% last December.
With interest rates projected to rise through the end of the year, we should expect demand to cool off even more. As a result, price growth will trend further downward as long as the fight against inflation continues.
Still, the pace of price moderation will take quite a while to be back to the pre-pandemic level, which was around 5% year-over-year growth, as builders show signs of slowing down new supply. This adds to the stickiness of housing prices, one of the most concerning components of inflation in the coming months.
At the current selling pace, there were three months’ worth of supply in June for existing homes, up markedly from 2.6 months in May and from the recent low of 1.6 months in January.
Listings, however, remained for only 14 days on the market, down from 16 days in May. That was the fewest number of days since the series was first tracked in 2011.
Inside the report, the share of first-time buyers inched up to 30% on the month while the shares of all-cash purchases and investors stayed at 25% and 16% respectively. Single-family home sales dropped 4.8% while condo sales were down a sharp 9.8%.