June home sales fall 5.4% from May, as prices set yet another record

The National Association of Realtors reported that sales of previously owned homes fell in June.

The group said that the sales count declined last month. Compared with June, sales were lower.

The sales pace is the lowest since the beginning of the Pandemic in 2020. It is the slowest pace since January and below the annual total.

The contracts were signed in April and May, before the average rate on the 30-year fixed mortgage shot above 6% and as inflation was surging towards rates not seen since the early 1980s.

The plunging affordability is the reason for it. Mortgage rates have never been this high before. People who would like to buy are priced out.

At the end of the month, there were 1.26 million homes for sale. It is the first year-over-year gain in three years. The inventory is at a three-month supply at the moment. It's still low, but it's getting better. There is more supply because more sellers are trying to take advantage of the last housing boom and because homes are sitting on the market longer.

The heat is being kept under home prices by the tight supply. The median price of an existing home sold in June was $416,000, an increase of 13.4% compared to the same month a year ago.

There is more supply on the higher end of the market. The sales of homes priced between $100,000 and $250,000 were lower than the sales of homes priced between $750,000 and $1 million. Home sales over $1 million increased 2%. The upper end is showing signs of weakness, as annual comparisons have been higher recently.

The market is still very fast. The average time a home was on the market was a new low.

It's a head-scratching number given slower sales. People are taking advantage of their interest rate lock. The days on the market are quick.

More recent indicators show that sales will fall more steeply in the coming months. The Mortgage Bankers Association says mortgage applications fell to a 22-year low last week.

Affordability is expected to be the main driver of the housing and business cycle, according to Danielle Hale, chief economist with Realtor.com. We see that affordable areas in the Northeast and Midwest are the hottest housing markets in June.