US Home Sales See Sharpest Monthly Decline In 1.5 Years As Record High Prices Keep Buyers On The Sideline

Existing home sales in the United States plunged 5.4% in June 2024 from the previous month, marking the steepest monthly drop since November 2022. This decline is attributed to heightened buyer apprehension, as the median sales price reached a record high for the second consecutive month.

In June 2024, sales totaled 3.89 million units, a decrease from 4.11 million in May, according to data released Tuesday by the National Association of Realtors (NAR). Year-over-year, sales also fell by 5.4%.

The median existing-home price for all housing types in June was $426,900, an all-time high and an increase of 4.1% from $410,100 a year ago.

Total housing inventory at the end of June was 1.32 million units, up 3.1% from May and 23.4% from a year ago (1.07 million). Unsold inventory stands at a 4.1-month supply at the current sales pace, up from 3.7 months in May and 3.1 months in June 2023.

NAR chief economist Lawrence Yun commented, "We’re seeing a slow shift from a seller’s market to a buyer’s market."

"Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis," the economist added.

Chart: Home Sales Drop 5.4% In June

Regional Performance

All four U.S. regions saw both sales declines and price gains.

• In the Midwest, existing-home sales dropped 8% from the previous month to an annual rate of 920,000 in June, a 6.1% decrease from the prior year. The median price in the Midwest was $327,100, up 5.5% from June 2023.
• In the South, existing-home sales fell 5.9% from May to an annual rate of 1.76 million in June, down 6.9% from a year earlier. The median price in the South was $373,000, a 1.7% increase from last year.
• Existing-home sales in the West declined 2.6% in June to an annual rate of 740,000, matching the figure from a year ago. The median price in the West was $629,800, up 3.5% from June 2023.
• In the Northeast, existing-home sales decreased 2.1% from May to an annual rate of 470,000 in June, a 6% decline from June 2023. The median price in the Northeast was $521,500, a significant 9.7% increase from a year earlier.

Buyer Activity And Mortgage Rates

Properties typically remained on the market for 22 days in June, down from 24 days in May but up from 18 days in June 2023, the monthly Realtors Confidence Index showed.

First-time buyers accounted for 29% of sales in June, down from 31% in May but up from 27% in June 2023. NAR’s 2023 Profile of Home Buyers and Sellers – released in November 2023 – reported the annual share of first-time buyers was 32%.

Freddie Mac reported the 30-year fixed-rate mortgage averaged 6.77% as of July 18, down from 6.89% a week earlier and 6.78% a year ago.

All-cash sales made up 28% of transactions in June, unchanged from May and up from 26% a year ago. Individual investors or second home buyers, who constitute a significant portion of cash sales, purchased 16% of homes in June, the same as in May but down from 18% in June 2023.

Distressed sales – foreclosures and short sales – accounted for 2% of sales in June, unchanged from the previous month and the prior year.

Market Reactions

Real estate stocks, as tracked by the Vanguard Real Estate ETF VNQ, inched 0.4% higher Tuesday, on track to close the session at the highest level since February 2023.

Leading the sector were Opendoor Technologies Inc. OPEN, Compass, Inc. COMP and eXp World Holdings, Inc. EXPI, each recording gains between 3% and 3.5%.

NexPoint Diversified Real Estate Trust NXDT, Office Properties Income Trust OPI and Alexandria Real Estate Equities, Inc. ARE were the laggards, down 3.5%, 2.9% and 2.6%, respectively.

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