June Sales Miss Expectations Amid High Mortgage Pressure
Sales of previously owned homes fell sharply in June, as high mortgage rates continued to weigh on the housing market. According to the National Association of Realtors (NAR), existing home sales dropped 2.7% from May to a seasonally adjusted annual rate of 3.93 million units. The figure came in well below analyst expectations, which forecasted a 0.7% decline.
Compared to June of the previous year, sales were flat, highlighting the persistent stagnation in buyer activity. The data reflects closings on contracts likely signed in April and May, during a period when mortgage rates hovered between 6.8% and just above 7%.
Inventory Grows, But Market Remains Tight
Despite the downturn in transactions, housing inventory continued to rise. At the end of June, there were 1.53 million homes on the market, up nearly 16% from a year ago. This equates to a 4.7-month supply at the current pace of sales—still short of the six-month threshold generally considered a balanced market.
The limited inventory is driving home prices to new highs. The median price of a home sold in June reached $435,300, a 2% increase from the previous year and the highest ever recorded for the month. This marks the 24th straight month of annual price gains, underscoring the persistent supply-demand mismatch.
Affordability Struggles Squeeze Entry-Level Buyers
The burden of high home prices and elevated mortgage rates is especially acute for first-time buyers, who accounted for just 30% of transactions—well below the historic norm of 40%. NAR estimates that if rates were to drop to 6%, as many as 160,000 additional renters could transition to homeownership.
Sales performance varied significantly by price bracket. Homes priced below $100,000 saw a 5% annual drop in activity, while sales of homes above $1 million surged 14%. The luxury segment continues to outpace the broader market, as high-end buyers remain less sensitive to interest rate fluctuations.
Homes Take Longer to Sell, Competition Softens
Houses are staying on the market longer, with an average of 27 days in June compared to 22 days a year earlier. Lower-priced properties under $500,000 are moving more slowly than those in higher price ranges. On average, homes received 2.4 offers—slightly below the 2.5 offers seen in May and 2.9 a year ago.
Cash transactions made up 29% of all sales, significantly higher than the pre-pandemic average of 20%. This suggests that wealthier, mortgage-free buyers are driving a disproportionate share of activity in today’s constrained environment.
