Sales of existing homes in the United States fell sharply in June to a nine-month low as high borrowing costs and record prices continued to sideline buyers. The National Association of Realtors reported Wednesday that home sales dropped 2.7% from May to a seasonally adjusted annual rate of 3.93 million units, missing analysts' expectations for a more modest 0.7% decline. Year-over-year, sales were unchanged.
The report, based on closings, reflects contracts signed in April and May, when the average 30-year fixed mortgage rate fluctuated above 7% and did not fall below 6.8%, according to Mortgage News Daily. The current average stands at 6.77%.
"High mortgage rates are causing home sales to remain stuck at cyclical lows," said Lawrence Yun, chief economist for the National Association of Realtors. "If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners."
The median sales price rose 2% from a year earlier to $435,300 - the highest ever recorded for June and the 24th consecutive month of annual price increases. Despite affordability concerns, luxury home sales continue to outperform. Sales of homes priced above $1 million surged 14% annually, while homes priced below $100,000 declined 5%.
Housing supply is growing but remains tight by historical standards. There were 1.53 million units for sale at the end of June, up 15.9% year-over-year, representing a 4.7-month supply at the current sales pace. A six-month supply is generally considered balanced.
"Multiple years of undersupply are driving the record high home price," Yun said. "Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market." First-time buyers accounted for 30% of purchases in June, still below the historical average of 40%.
Homes are taking longer to sell, with the average listing spending 27 days on the market, up from 22 days a year earlier. Higher-end homes are moving faster than those under $500,000. The average number of offers per home fell to 2.4, compared with 2.9 a year ago.
All-cash deals remained elevated at 29% of sales, well above the pre-pandemic average of 20%.
