US home sales slowest since start of year on tight inventory

The housing market has taken a hit from elevated mortgage rates

By AFP

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Townhomes under construction in Mundelein, Illinois. In June, existing home sales slipped 3.3 per cent from May to a seasonally adjusted annual rate of 4.2 million. — AFP

Published: Thu 20 Jul 2023, 8:21 PM

US sales of existing homes have fallen to the slowest rate since January, said industry data released Thursday, with the median sales price hitting the second-highest on record while inventory remains tight.

The housing market has taken a hit from elevated mortgage rates and limited supply, causing activity to slump.

In June, existing home sales slipped 3.3 per cent from May to a seasonally adjusted annual rate of 4.2 million, said the National Association of Realtors (NAR).

Compared with a year ago, sales fell 18.9 per cent while sales over the first half of 2023 were 23 per cent lower, the association added in a report.

“There are simply not enough homes for sale,” said NAR chief economist Lawrence Yun in a statement. “The market can easily absorb a doubling of inventory.”

Total housing inventory in June was down 13.6 per cent from a year ago, with over three-quarters of homes sold staying on the market for below a month.

Meanwhile, the median existing home sales price was $410,200, the second-highest on record by the NAR since 1999. The highest was June last year.

Yun added that June is a month where larger homes tend to be sold, telling reporters that this does not imply home prices are strengthening from winter to summer.

“Home sales fell but home prices have held firm in most parts of the country,” Yun said.

“Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month,” he added.

Mortgage rates remain high, with the popular 30-year fixed-rate mortgage averaging nearly seven per cent as of July 13 — up from 6.8 per cent the previous week, according to home loan finance company Freddie Mac.

Existing home sales make up the vast majority of the US property market, and all four regions across the country logged sales declines from a year ago.

“The gridlock in the existing home market is unlikely to be broken until mortgage rates fall substantially,” said analysts at Pantheon Macroeconomics in a report.

“In the meantime, both the supply of existing homes coming to the market and the number of transactions will remain low,” the report added.