Home sales in June are down 5.4% from May as prices hit another record

A sign is posted for a home for sale on July 14, 2022 in San Francisco, California.

Justin Sullivan | Getty Images

According to a monthly report from the National Association of Realtors, sales of previously owned homes fell 5.4% in June from May as prices set records and rates rose.

Sales last month fell to a seasonally adjusted rate of 5.12 million units, the group said. Turnover was 14.2% lower than in June 2021.

This is the lowest rate of sales since the same month in 2020, when sales fell very briefly at the start of the pandemic. Beyond that, it’s the lowest pace since January 2019, and below the 2019 annual total, pre-pandemic.

These numbers are based on home closings, so the contracts were likely signed in April and May, before the average 30-year fixed-mortgage interest rate climbed above 6% and inflation spiked towards rates that have risen since the beginning. of the 1980s were no longer seen.

“Obviously it’s due to falling affordability,” said Lawrence Yun, brokerage chief economist. “We’ve never seen mortgage rates rise so quickly on this scale. Even people who want to buy are priced.”

At the end of June there were 1.26 million homes for sale. That’s a 2.4% increase from June last year, and the first year-on-year gain in three years. At the current rate of sales, the stock is now at three months’ stock. That’s still considered low, but improving. Supply is increasing, both as more sellers try to take advantage of perhaps the last of the red-hot, pandemic-induced housing boom, and because homes are now on the market longer.

The still tight supply, however, keeps the heat below house prices. The median price of an existing home sold in June set another all-time high at $416,000, up 13.4% year-on-year.

Activity remains stronger at the higher end of the market, where there is more supply. For example, sales of homes priced between $100,000 and $250,000 were down 31% annually, while sales of homes priced between $750,000 and $1 million were up 6%. Sales of homes worth more than $1 million rose 2%. The upside appears to be weakening as annual comparisons have been much higher in recent months.

While sales are falling, the market is still incredibly fast. The average time a house was on the market was 14 days, a record low.

“This is a staggering number given the slower sales,” Yun said. “People are trying to take advantage of their interest rate lock. That may explain why the days in the market are so fast.”

Sales are likely to fall more sharply in the coming months as more recent indicators point to much weaker buyer demand. Mortgage applications fell to a 22-year low last week, with home buyer demand falling 19% from the same week a year ago, according to the Mortgage Bankers Association.

“Based on trends at this stage of the housing and business cycle, I expect affordability to be the bigger driver than availability going forward,” said Danielle Hale, chief economist at Realtor.com. “We’re already seeing affordable areas in the Northeast and Midwest top Realtor.com’s real estate markets in June as homebuyers continue to take advantage of workplace flexibility as they look for ways to lower their housing costs.”

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