Home sales across the United States took an unexpected dip in June, as record-high prices and stubbornly elevated mortgage rates pushed many potential buyers out of the market.
According to the National Association of Realtors, sales of previously owned homes dropped 2.4% last month, settling at a seasonally adjusted annual rate of 4.09 million units. That figure came in well below what economists surveyed by Reuters had anticipated — a rate of 4.20 million units.
Regionally, sales ticked upward in the Northeast, while the Midwest, South, and West all saw declines.
Because existing home sales are recorded at the time a contract closes, last month’s figures likely reflect deals that were agreed upon back in April and May. While mortgage rates have eased somewhat after spiking in response to conflict in the Middle East, the average rate on a 30-year fixed mortgage is still roughly 45 basis points higher than it was before the conflict began, according to data from mortgage financing firm Freddie Mac.
Compared to the same time last year, home sales were actually up 2.8% in June.
Lawrence Yun, the chief economist for the National Association of Realtors, explained the mixed signals this way: “The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions.”
The elevated mortgage rate environment is also keeping many current homeowners from putting their properties on the market. A large portion of homeowners locked in fixed mortgage rates below 5%, giving them little incentive to sell and take on a higher rate elsewhere. As a result, the inventory of previously owned homes available for sale slipped 0.6% to 1.56 million units — though that figure is still 1.3% higher than a year ago.
A significant housing shortage persists nationwide, especially when it comes to entry-level homes. The National Association of Home Builders estimates the country is short by roughly 1.2 million homes.
At the rate homes sold in June, it would take about 4.6 months to work through the current supply — the same pace as a year ago. That tight supply is a key reason home prices remain high.
Congress recently passed a bipartisan housing affordability bill that includes provisions to limit single-family home purchases by investment firms and to streamline or waive environmental reviews for new construction. However, President Donald Trump has said he will not sign the legislation until a separate bill related to voting is enacted.
The median price for an existing home last month climbed 1.8% from a year earlier, reaching a record $440,600.
First-time buyers made up 33% of all sales in June, an improvement from 30% a year ago — though experts say a 40% share is needed for a truly healthy housing market.
Homes sat on the market a median of 28 days, up slightly from 27 days the previous year. Distressed sales, which include foreclosures, fell to 2% of all transactions, down from 3% a year ago.
