On July 14, 2022, a sign was placed in front of a home for sale in San Francisco, California.
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Sales of first-home homes fell 5.4% in June from May, according to a monthly report by the National Real Estate Association, as prices rose in marks and rates.
The annual rate of seasonal sales fell to 5.12 million units last month, the group said. Sales were 14.2% lower than in June 2021.
It is the slowest pace of sales since the same month in 2020, when sales fell very briefly at the start of the Covid pandemic. Beyond that, it is the slowest pace since January 2019, and below the 2019 total, ahead of the pandemic.
These numbers are based on home foreclosures, so contracts were likely signed in April and May, before the 30-year average mortgage rate rose by more than 6% and inflation was rising at unprecedented rates since the early 1980s.
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“It’s clear because of the decline in bargains,” said Lawrence Yun, chief economist at Realtors. “We’ve never seen mortgage rates go up so quickly to this extent. Even people who want to buy, prices come out.”
At the end of June, there were 1.26 million homes for sale. This is an increase of 2.4% on the previous June, and the first year-on-year gain in three years. At the current pace of sales, the inventory is currently in a three-month supply. That’s still considered low, but it’s getting better. The supply is growing, both because more sellers are perhaps trying to take advantage of the latest pandemic-induced housing boom, and because homes are spending more time on the market.
The still-tight supply, however, is keeping the heat below house prices. The average price of an existing home in June set another record at $ 416,000, up 13.4% year-on-year.
Activity remains stronger at the top of the market, where there is more supply. Home sales of $ 100,000 to $ 250,000, for example, were down 31% year-on-year, and home sales of $ 750,000 to $ 1 million were up 6%. Home sales of more than $ 1 million rose 2%. The upper end seems to be weakening as the year-on-year comparisons in recent months have been much higher.
While sales are falling, the market is still incredibly fast. The average time a home spent on the market was 14 days, the lowest record.
“This is an astonishing number, with sales slowing down,” Yun said. “People are trying to take advantage of the interest rate lock. That could explain why market days are so fast.”
Sales will fall sharply in the coming months, as recent indicators indicate that buyer demand is much weaker. Mortgage applications fell to a 22-year low last week, and home buyer demand fell 19% from a year earlier in the same week, according to the Association of Mortgage Bankers.
“Given the trends in this phase of the housing and business cycle, I expect availability to be a greater driver than availability in the future,” said Danielle Hale, chief economist at Realtor.com. “We already see that the Northeast and Central areas are dominated by the hottest housing markets in Realtor.com June, as home buyers continue to take advantage of workplace flexibility to look for ways to reduce housing costs.”
Home sales in June fell by 5.4% since May, as prices set another record
Source link Home sales in June fell by 5.4% since May, as prices set another record