Sales of previously owned homes declined in June due to higher mortgage rates and a limited selection of available properties. The housing market is facing challenges as elevated mortgage rates reduce affordability and discourage both buyers and sellers.
Reduced Affordability Hinders Home Purchases
High mortgage rates have made it more difficult for potential buyers to enter the market, resulting in reduced demand. Additionally, homeowners are reluctant to sell their properties due to the higher rates, which has further limited the supply of homes for sale.
Declining Demand and Supply Impacts Home Sales
The decrease in both demand and supply has led to a decline in the number of home sales. However, despite the slowdown, home prices have not dropped significantly. In fact, in many parts of the country, buyers who are still able to afford homes are facing intense competition and bidding wars.
Existing Home Sales Decline in June
According to the National Association of Realtors, existing home sales, which account for the majority of the housing market, decreased by 3.3% in June compared to the previous month. The seasonally adjusted annual rate of home sales was 4.16 million, the slowest pace since January. Sales in June also fell by 18.9% compared to the same period last year.
Prices Remain High Despite Slight Dip
Although prices have seen a slight decline from last year’s peak, they still remain high historically. The national median existing-home price dropped by 0.9% in June compared to the previous year, reaching $410,200 – the second-highest level on record since 1999.
Federal Reserve’s Impact on the Housing Market
The Federal Reserve’s efforts to curb inflation by increasing interest rates have had a direct effect on the housing market. While rates remained unchanged in June, there is speculation that they may be raised at the upcoming meeting. This will continue to shape the conditions of the housing market.
Regional Variations in Housing Market Conditions
Housing market conditions vary significantly across the country. The western half of the U.S. has experienced the largest decrease in home prices, while many eastern markets continue to see price growth from the previous year.
The housing market is currently challenging for buyers due to higher mortgage rates and limited supply. Although sales have declined, prices have remained relatively stable, and competition among buyers remains fierce. As the Federal Reserve considers future interest rate changes, the housing market will continue to adapt to these economic conditions.