A house in Chicago, IL will be available for sale on March 22, 2024.
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Sales of previously owned homes fell 5.4% in June from May to 3.89 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Sales also fell 5.4% from June last year. This is the slowest sales pace since December.
These are closed sales, so are based on contracts signed primarily in April and May, when the average rate on a 30-year fixed mortgage jumped above 7%. Interest rates have since fallen back slightly to a high of 6%.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said Lawrence Yun, chief economist for the Association of Realtors. “Homes are staying on the market longer and sellers are receiving fewer offers. Less and less. More buyers are insisting on home inspections and appraisals, and inventory is definitely increasing across the country.”
As of the end of June, inventory increased by 23.4% year-on-year to 1.32 million vehicles. Although it was away from historical lows, the supply was still only enough for 4.1 months. A six-month supply is considered a balance between buyers and sellers.
As homes stay on the market longer, inventory levels reach the highest supply levels since May 2020. The average time a home is on the market is 22 days, compared with 18 days a year ago.
However, even new supply will not help ease prices. The median existing home sales in June was $426,900, an increase of 4.1% from the same period last year and a record high for the second consecutive month. Part of it is skewed because the high-end market is much stronger.
Sales of homes priced over $1 million were the only price category to increase over last year, while the biggest declines were in homes $250,000 and below.
The supply of homes for sale is weakest at the lower end, but is now seeing a new surge. While national sales prices are higher, new listing prices are lower.
“The median listing price has been depressed due to the influx of smaller, lower-priced listings. In fact, the number of homes for sale priced between $200,000 and $350,000 has surged by 50 percent compared to a year ago. %.
High-end buyers tend to use more cash, with 28% of sales being all cash, up from 26% a year ago. However, the proportion of investors fell slightly, accounting for 16% of sales from 18% a year ago.
“Assuming more inventory continues to be added, two things will happen. Either home sales will rise, or if prices don’t rise, prices will fall,” Yun added.
