U.S. existing home sales continued to slide in June as a worsening supply shortage left limited options for would-be homebuyers.
Sales of previously owned homes tumbled 3.3% in June from the previous month to an annual rate of 4.16 million units, according to new data released Thursday by the National Association of Realtors (NAR). On an annual basis, existing home sales are down 18.9% when compared with June 2022.
"There are simply not enough homes for sale," said Lawrence Yun, chief economist at NAR. "The market can easily absorb a doubling of inventory."
There were about 1.08 million homes for sale at the end of June, according to the report, unchanged from the previous month and down 13.6% from one year ago.
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Limited inventory has bolstered consumer demand: Homes sold on average in just 18 days last month, the same as May. While that is down slightly from the 14 days recorded in June 2022, it marks a major increase from prior years. Before the COVID-19 pandemic, homes typically sat on the market for about a month before being sold.
At the current pace of sales, it would take roughly 3.1 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level.
"Affordability constraints and mortgage rate lock are keeping existing homeowners from listing their homes, and with the flow of listings coming onto the market down significantly from pre-pandemic norms, sales continue to take a hit," said Nicole Bachaud, senior economist at Zillow.
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The median price of an existing home sold in June was about $410,200 – the second-highest price ever recorded since the NAR began tracking the data in 1999. It is down just 0.9% from the all-time high of $413,800 recorded one year ago.
Prices varied across the country, with housing costs climbing in the Northeast and Midwest, but retreating in the South and the West.
"Home sales fell, but home prices have held firm in most parts of the country," Yun said. "Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month."
The Federal Reserve's aggressive interest-rate hike campaign sent mortgage rates soaring above 7% for the first time in nearly two decades, cooling the red-hot housing market. But even though rates have been slow to retreat, home prices are once again on the upswing as buyers adjust to the new rates and compete for limited supply.
Rates on the popular 30-year fixed mortgage are currently hovering around 6.96%, according to Freddie Mac, well above the 5.51% rate recorded one year ago and the pre-pandemic average of 3.9%.
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That is largely due to a lack of available homes for sale.
Sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell with rates continuing to hover near a two-decade-high, leaving few options for eager would-be buyers.
A recent report from Realtor.com showed that the number of available homes on the market in June was down more than 47% from the typical amount before the COVID-19 pandemic began in early 2020.
