June home sales drop as prices hit a record high
This report is based on closings, so contracts that were likely signed in April and May, when the average rate on the 30-year fixed mortgage jumped above 7% a few times and never went below 6.8%, according to Mortgage News Daily.
"High mortgage rates are causing home sales to remain stuck at cyclical lows," said Lawrence Yun, chief economist for the NAR, in a release. "If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners."
Mortgage rates have not moved markedly in the last several months, remaining stubbornly high amid concerns over the broader economy. The average rate now is 6.77%.
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Supply continues to gain, with 1.53 million units for sale at the end of June. That is an increase of 15.9% year over year and represents a 4.7-month supply at the current sales pace. A 6-month supply is considered balanced between buyer and seller, so the market is still lean.
The median price of a home sold in June was $435,300, up 2% year over year and another record high for the month of June. That is the 24th consecutive month of annual increases.
"Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market," said Yun, noting also that the average homeowner's wealth increased by $140,900 over the past five years.
Sales continue to outperform on the higher end of the market. Homes priced below $100,000 dropped 5% annually. Homes priced between $100,000 and $250,000 rose 5%. And homes priced above $1 million jumped 14%.
Houses are spending longer on the market, at an average of 27 days compared with 22 days last June. Higher-end homes are selling faster than those priced below $500,000.
First-time buyers represented 30% of sales. Historically that demographic makes up 40% of all buyers. The share of all-cash deals remained elevated at 29% of sales. Pre-Covid, cash sales accounted for roughly 20% of the market.
Homes listed received an average of 2.4 offers, down slightly from 2.5 last month and from 2.9 a year earlier.
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