Existing-Home Sales Slid 5.4% in June
According to the National Association of REALTORS®, existing-home sales decreased for the sixth consecutive month in June. In addition, sales fell month over month in three of the four major U.S. areas, while one region saw no change.
Single-family homes, townhomes, condominiums, and co-ops made up the majority of completed existing-home sales, which fell by 5.4 percent from May to a seasonally adjusted annual pace of 5.12 million in June.
The good news is that inventory is finally growing. Although available homes for sale are still deficient, we are seeing a trend of growth which hopefully will begin to offer relief to the relentless increase in home prices. At the end of June, there were 1,260,000 registered housing units, up 2.4 percent from the previous year and 9.6 percent from May. (1.23 million). At the current sales rate, unsold inventory has a 3.0-month supply, up from 2.6 months in May and 2.5 months in June 2021.
As prices rose across the board, the median existing-home price for all property types in June was $416,000, a 13.4% rise from June 2021 ($366,900). This increase represents the longest-ever string of year-over-year growth.
U.S. Housing Starts Drop To Nine-Month Low In June
The number of new homes being built in the U. S. fell to a nine-month low in June, and permits for new construction projects also fell. This is the most recent sign of a slowing housing market, as rising mortgage rates make homes less affordable.
While activity in the single-family category fell to a two-year low, multi-family construction activity increased as rising rents enhanced the attraction of apartment complexes, cushioning the total decline. As a result, the second quarter’s U.S. gross domestic product is anticipated to be impacted by the changes in the housing market.
The Commerce Department said on Tuesday that housing starts dropped by 2 percent last month to a seasonally adjusted annual rate of 1.559 million units, the lowest level since September 2021. The rate for May’s data was increased from the previously reported 1.549 million units to 1.591 million units.
The number of homes whose construction has been approved but has not yet begun rose by 1.1% to 285,000 units. The backlog for single-family homes decreased by 1.3 percent to 147,000.
For the fourth consecutive month, the number of homes under construction but not yet finished reached a record high of 1.68 million units, highlighting the challenges contractors face in completing jobs on time when labor and materials are in short supply.
Higher Mortgage Rates, Economic Uncertainty Behind Declining Home Purchase Applications
According to the Mortgage Bankers Association’s (MBA) builder application survey, new home purchase applications decreased 12 percent year over year in June due to rising mortgage rates and general economic anxiety. Application volume decreased by 10% from one month to the next.
Fewer properties were available for home buyers from March through May due to a decline in new residential construction and permitting activity. Moreover, MBA reports that a seasonally adjusted annual rate for new single-family home sales in June was estimated to be around 620,000, representing a 15% decrease, or more than 100,000 units, from May.
Next week’s potential market moving reports are:
- Monday, July 25th – No Report
- Tuesday, July 26th – S&P Case-Shiller National Home Price Index, New Home Sales
- Wednesday, July 27th – Pending Home Sales Index, Fed Funds Target Rate
- Thursday, July 28th – Initial Jobless Claims, Continuing Jobless Claims
- Friday, July 29th – PCE Inflation Index, Real Disposable Income, Employment Cost Index
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.