Existing home sales dropped for the fifth straight month in June, according to the National Association of Realtors. Three out of four major U.S. regions experienced month-over-month sales declines and one region held steady. Year-over-year sales sank in all four regions.
Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 5.4% from May to a seasonally adjusted annual rate of 5.12 million in June. Year-over-year, sales fell 14.2% (5.97 million in June 2021).
“Falling housing affordability continues to take a toll on potential home buyers,” said NAR chief economist Lawrence Yun. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
Total housing inventory registered at the end of June was 1.26 million units, an increase of 9.6% from May and a 2.4% rise from the previous year (1.23 million). Unsold inventory sits at a three-month supply at the current sales pace, up from 2.6 months in May and 2.5 months in June 2021.
The median existing home price for all housing types in June was $416,000, up 13.4% from June 2021 ($366,900), as prices increased in all regions. This marks 124 consecutive months of year-over-year increases, the longest-running streak on record.
Properties typically remained on the market for 14 days in June, down from 16 days in May and 17 days in June 2021. The 14 days on market are the fewest since NAR began tracking it in May 2011. Eighty-eight percent of homes sold in June 2022 were on the market for less than a month.
“Finally, there are more homes on the market,” Yun added. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
First-time buyers were responsible for 30% of sales in June, up from 27% in May and down from 31% in June 2021. NAR’s 2021 Profile of Home Buyers and Sellers – released in late 2021– reported that the annual share of first-time buyers was 34%.
All-cash sales accounted for 25% of transactions in June, the same share as in May and up from 23% in June 2021.
“Existing home sales for June are mainly bad news, but with a glimmer of hope,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Higher prices and higher mortgage rates continue to frustrate potential home buyers, but that’s causing inventories to creep up, which eventually should moderate price increases. We’re already seeing a little softening in housing inflation, with some sellers reducing prices.”
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in June, unchanged from May and a slight increase from 14% in June 2021. Distressed sales – foreclosures and short sales – represented less than 1% of sales in June, essentially unchanged from May 2022 and June 2021.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.52% in June, up from 5.23% in May. The average commitment rate across all of 2021 was 2.96%.
“If consumer price inflation continues to rise, then mortgage rates will move higher,” Yun said. “Rates will stabilize only when signs of peak inflation appear. If inflation is contained, then mortgage rates may even decline somewhat.”
Realtor.com’s market trends report in June shows that the largest year-over-year median list price growth occurred in Miami (+40.1%), Orlando (+30.6%) and Nashville (+30.6%). Austin reported the highest increase in the share of homes that had their prices reduced compared to last year (+24.7 percentage points), followed by Phoenix (+22.2 percentage points) and Las Vegas (+20.1 percentage points).
Single-family and condo/co-op sales
Single-family home sales declined to a seasonally adjusted annual rate of 4.57 million in June, down 4.8% from 4.80 million in May and down 12.8% from one year ago. The median existing single-family home price was $423,300 in June, up 13.3% from June 2021.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 550,000 units in June, down 9.8% from May and down 24.7% from one year ago. The median existing condo price was $354,900 in June, an annual increase of 11.5%.
“Owning a home can create a path to financial freedom and lead to long-term wealth gains that families can pass on to future generations,” said NAR President Leslie Rouda Smith, a Realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. “We will remain steadfast in our efforts to protect homeowner rights, and our members will continue to deliver valuable expertise to consumers throughout the home buying process.”
Regional breakdown
At an annual rate of 670,000 in June, existing home sales in the Northeast were unchanged from May and down 11.8% from June 2021. The median price in the Northeast was $453,300, a 10.1% jump from one year ago.
Existing home sales in the Midwest slid 1.6% from the previous month to an annual rate of 1,230,000 in June, retreating 9.6% from June 2021. The median price in the Midwest was $306,900, a 10.2% increase from one year before.
Existing home sales in the South slipped 6.2% in June to an annual rate of 2,260,000, down 14.1% from the previous year. The median price in the South was $374,900, a 16.8% bounce from one year ago. For the tenth consecutive month, the South recorded the highest pace of price appreciation in comparison to the other three regions.
Existing home sales in the West decreased 11.1% compared to the month before to an annual rate of 960,000 in June, down 21.3% from this time last year. The median price in the West was $624,000, an increase of 9.6% from June 2021.
“There are several reasons to be optimistic going forward,” said Neda Navab, Compass’ president of national brokerage operations. “The same fundamental drivers of housing demand that have driven the market the past several years, including waves of younger buyers entering into their home buying years and an unrelenting rise in rents, remain firmly in place.”
She added, “Buyers in the market today may find more negotiating room than they’ve had in years, and a slowly growing share of first-time buyers proves they are certainly aware that locking in a home today at a long-term price is a terrific hedge against inflation and rising rents. For sellers, price growth remains robust and typical time on market has stayed incredibly low, a signal that if their homes are reasonably priced, well-located and in decent shape, they can still expect plenty of attention from buyers.”