Existing-home sales continued to retreat in June as the housing market faces a crushing inventory shortage. But high buyer demand is still evident as home shoppers bid up prices.
The median sale price for an existing home in June was $410,200, the second-highest recorded in the last 24 years, according to the National Association of REALTORS®’ latest housing report. The all-time high of $413,800 was set a year ago, according to NAR data. “Home sales fell, but home prices have held firm in most parts of the country,” NAR Chief Economist Lawrence Yun says of the June figure. “Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price.”
Homes are selling at a brisk pace: Seventy-six percent of homes sold in June were on the market for less than a month, according to NAR’s data. The typical time on market was just 18 days.
Despite Challenges, Buyers Are Optimistic
Even up against high home prices and mortgage rates, not to mention limited housing choices, Americans overall still appear eager to buy a home. Fifty-four percent of consumers say now is a good time to purchase, according to TD Bank’s latest Mortgage Service Index. But home buyers are stressed, citing inventory and mortgage rates among their biggest stressors, the survey finds.
Home buyers have reason to be concerned about the lack of homes on the market: Total housing inventory at the end of June remained historically low at 1.08 million units. Inventory is down 13.6% from a year ago, NAR’s data shows. “There are simply not enough homes for sale,” Yun says. “The market can easily absorb a doubling of inventory.”
But new-home construction was down last month and isn’t making up the difference, shows new data from the Census Bureau. Single-family home production decreased 7% year over year in June, following four consecutive monthly gains. The National Association of Home Builders blamed elevated construction costs and rising mortgage rates for a reduction in homebuilding activity and worsening affordability conditions for buyers.
Existing-home sales—which reflect completed transactions for single-family homes, townhomes, condos and co-ops—fell 3.3% in June compared to May, reaching a seasonally adjusted annual rate of 4.16 million. Sales are down about 19% compared to last year’s brisk pace, NAR reports. “The first half of the year was a downer for sure,” Yun says. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”
The housing market is still seeing a mix of buyers. First-time home buyers comprised 27% of sales in June, although that’s down from 30% a year ago. Individual investors or second-home buyers purchased 18% of homes, up from 16% last year. They tend to make up the biggest bulk of all-cash sales, which accounted for 26% of transactions last month, up slightly from their 25% market share in both May and June of last year.
Sales varied across the country last month, with the Northeast posting gains, the Midwest holding steady, and the South and West reporting decreasing sales, NAR’s report shows. All four regions recorded year-over-year sales declines.
- Northeast: Existing-home sales rose 2% month over month to an annual rate of 510,000 but are down 21.5% from a year ago. Median price: $475,300, up 4.9% from the prior year.
- Midwest: Sales were unchanged from a month ago at an annual rate of 990,000, falling 19.5% from one year ago. Median price: $311,800, up 2.1% from June 2022.
- South: Sales decreased 5.4% from May to an annual rate of 1.91 million, a decrease of 16.2% compared to the previous year. Median price: $366,600, down 1.2% from a year ago.
- West: Sales fell 5.1% from the previous month to an annual rate of 750,000, down 22.7% from a year ago. Median price: $606,500, down 3.4% from June 2022.