WASHINGTON: US existing home sales fell more than expected in June as the median house price set another record high, but improving supply and declining mortgage rates offered hope that activity could rebound in the months ahead.
Home sales dropped 5.4 per cent last month to a seasonally adjusted annual rate of 3.89 million units, the lowest level since December, the National Association of Realtors said on Tuesday. Economists polled by Reuters had forecast home resales would slip to a rate of 4.00 million units.
Home resales, which account for a large portion of US housing sales, declined 5.4 per cent on a year-on-year basis in June. The median existing home price soared 4.1 per cent from a year earlier to an all-time high of US$426,900 (RM2 million), the second straight month it scaled a record high. Home prices increased in all four regions.
Home resales are counted at the close of a contract. Sales in June likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage was above 7.0 per cent.
The average rate on a 30-year fixed-rate mortgage dropped to a four-month low of 6.77 per cent last week, down from 6.89 per cent and matching the average during the same period in 2023, data from mortgage finance agency Freddie Mac showed. It has eased from a six-month high of 7.22 per cent in early May amid hopes that the Federal Reserve will deliver a long-awaited interest rate cut in September.
"We're seeing a slow shift from a seller's market to a buyer's market," said Lawrence Yun, the NAR's chief economist. "Homes are sitting on the market a bit longer, and sellers are receiving fewer offers."
Sales tumbled 5.9 per cent in the densely populated South. They plunged 8.0 per cent in the Midwest, which is considered the most affordable region. Sales fell 2.1 per cent in the Northeast and decreased 2.6 per cent in the West.
Inventory rise
Housing inventory increased 3.1 per cent to 1.32 million units last month. Supply jumped 23. per cent from one year ago.
A surge in insurance premiums across the country as weather-related claims rise is forcing some homeowners to put their properties on the market.
Nonetheless, entry-level homes remain in short supply and there is not enough new construction. The government reported last week that single-family homebuilding fell to an eight-month low in June, while permits for future construction were the lowest in a year. Many homeowners have mortgage rates under 5.0 per cent.
Economists estimated that residential investment, which includes home building and sales, likely subtracted from gross domestic product in the second quarter, after adding more than half a percentage point in the January-March quarter.
At June's sales pace, it would take 4.1 months to exhaust the current inventory of existing homes. That was the highest level in more than four years and was up from 3.1 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
"Supply and demand dynamics are nearing a balanced market condition," Yun said.
Properties typically stayed on the market for 22 days in June compared to 18 days a year ago. First-time buyers accounted for 29 per cent of sales versus 27 per cent a year ago.
That share remains below the 40 per cent that economists and realtors say is needed for a robust housing market.
All-cash sales made up 28 per cent of transactions, up from 26 per cent a year ago. Distressed sales, including foreclosures, represented 2.0 per cent of transactions, unchanged from last year.