Existing-Home Sales Tanked In June As Seller’s Market Corrects

Existing-home sales continued to their downward spiral in June as buyers take a “wait and see” approach to cooling rates.

Existing sales plummeted by 5.4% last month to a seasonally adjusted annual rate of 3.89 million, according to the National Association of Realtors. They were down the same amount YOY.

The slump came as the median sales price climbed to the highest price ever recorded for the second consecutive month, up 4.1% YOY to $426,900. This was the twelfth consecutive month of annual price gains.

At the same time, the inventory of unsold existing homes increased by 3.1% from the month prior to 1.32 million, the equivalent of 4.1 months’ supply at the current monthly sales pace. Annually, it jumped 23.4%.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR Chief Economist Lawrence Yun. 

“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 data was driven entirely by the South, Northeast, and Midwest. Sales in the West didn’t budge.

Prospective buyers are tuned into record-high home prices and recent mortgage rate declines. They appear to be waiting to see how far rates will fall before committing to an expensive house.

“This is not uncommon: sometimes as rates decline, demand weakens, and the apparent paradox is driven by buyers making sure rates don’t decline further before they decide to purchase,” Sam Khater, Freddie Mac’s Chief Economist, said of the trend.

Sales are suffering as a result. Redfin recently reported that 15% of all June purchases were canceled, a new all-time high.

Buyers will likely take their time returning to the market. But analysts at Fannie Mae expect existing home sales to outperform new home sales by year-end, thanks to regional differences in construction and inventory.

“[M]any Sunbelt metros are currently seeing significant increases in for-sale inventories, in part due to new construction, while supply in much of the Northeast and Midwest remains extremely tight,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.

“In aggregate, we expect these varied market conditions to lead to a slight decline in total new home sales nationally for the full-year 2024, but a slight increase in existing homes sales.”