US Existing Home Sales Plunge In June As Affordability Collapses

On the heels of ugly homebuilder sentiment and tumbling single-family home starts and permits, analysts expected existing home sales to extend their recent decline with a 1.1% MoM drop in June. They were right in direction but severely wrong in magnitude as existing home sales slumped 5.4% MoM in June…

Source: Bloomberg

That is the 5th straight month of existing home sales declines, and home sales are down a stunning 14.2% YoY.

“Falling housing affordability continues to take a toll on potential home buyers,” said NAR Chief Economist Lawrence Yun.

“Both mortgage rates and home prices have risen too sharply in a short span of time.”

The SAAR is below the full year pace for 2019…

Source: Bloomberg

Interestingly, properties typically remained on the market for 14 days in June, down from 16 days in May and 17 days in June 2021. The 14 days on market are the fewest since NAR began tracking it in May 2011.

Finally, there is some good news – The number of homes for sale rose for the first time in three years on an annual basis to 1.26 million, the highest since September. At the current sales pace it would take three months to sell all the homes on the market, marking the fifth straight rise in months’ supply.

“Finally, there are more homes on the market,” Yun added.

“Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”

Despite hopes that prices would start to roll over – helping with affordability – the median selling price rose 13.4% from a year earlier to a fresh record of $416,000. First-time buyers accounted for 30% of US sales last month, up from 27% in May.