Existing Homes Sales Nationally in June 2023

🏠 Housing Market Update: Sales of pre-owned homes experienced a 3.3% decline in June compared with May, reaching a seasonally adjusted annualized rate of 4.16 million units, as reported by the National Association of Realtors.

💹 Looking back at June last year, sales were down by 18.9%, marking the slowest sales pace for June since 2009.

📉 The persistent weakness in the housing market can be attributed to a critical shortage of supply, rather than a lack of demand. At the end of June, there were just 1.08 million homes available for sale, which is 13.6% lower than June 2022. This limited inventory results in a supply of only 3.1 months at the current sales pace, while a balanced market typically requires a six-month supply.

🔍 "There are simply not enough homes for sale," explained Lawrence Yun, chief economist for the Realtors. "The market can easily absorb a doubling of inventory."

💰 As a consequence of this supply-demand imbalance, home prices remain under pressure. The median price of an existing home sold in June stood at $410,200, the second-highest ever recorded by the Realtors. While last June's price was marginally higher, this median measure also reflects the preference for higher-priced homes as mortgage rates have risen compared to the previous year, making the low-end market more active.

🏡 Despite the drop in home sales, home prices have remained relatively stable in most areas of the country. The scarcity of supply continues to generate multiple-offer situations, with approximately one-third of homes selling above the list price in the latest month.

📉 The housing market is not expected to rebound soon due to the impact of mortgage rates on affordability. The June sales data is based on closings from contracts likely signed in April and May when mortgage rates were in the mid 6% range, later surging to over 7% at the end of May and remaining in the 7% range throughout June, coinciding with the rise in home prices.

🤝 First-time buyers are encountering significant challenges in this environment, with their share of June sales dropping to 26%, down from 30% in June 2022 – the lowest share since the Realtors began tracking this metric.

📈 On a more positive note, the higher end of the housing market appears to be recovering. Although sales declined across all price points, the higher-priced segment experienced the smallest drop, in contrast to the previous year when higher-priced home sales were declining sharply.

💼 As competition intensifies among buyers, more individuals are turning to cash transactions to entice sellers. All-cash sales accounted for 26% of June transactions, slightly higher than both May and June of the previous year.