U.S. homes are not selling, and prices continue to rise
June, usually the height of the spring housing season, saw sales of existing homes drop from the previous month, according to the National Association of Realtors.
U.S. home prices hit another record high in June, even as buyers backed out of deals and stood on the sidelines. This should be the busiest time of year, but the housing market remains frozen in place and sales are down.
Last month, sales of existing homes dropped by 2.7% from the previous month, while the median home price, at $435,300, hit a record high for the month of June, according to the National Association of Realtors.
June is supposed to be the height of the spring housing season, the time of year when Americans move before their attention shifts to summer vacations, the next school year and the winter holidays. Sales typically pick up again in the fall, but not enough to compensate for a lackluster spring. And this spring has been anything but active. In a sign that buyers are skittish about making a large purchase in an uncertain economy, about 15% of June deals fell apart, the highest level for the month of June on record, according to Redfin.
“What it really comes down to, as always, is affordability,” said Daryl Fairweather, the chief economist at Redfin. Buyers, she said, “just don’t feel like they can afford to buy a home at these prices.”
This disconnect between home prices and home sales has defined the last three years of the housing market, and kept it in a doom loop. June was the 24th straight month of year-over-year price growth in the United States, yet regions like the Northeast saw the number of sales plummet by 8% in June from the previous month, according to NAR. These conditions are the result of a combination of a lack of available homes to buy and stubbornly high mortgage rates, creating an affordability crisis for millions of Americans who have been all but shut out of the housing market for three years.
The 30-year mortgage rate has been stuck just below 7% since November, and was 6.75% as of July 17, according to Freddie Mac, the mortgage finance company. Mortgage rates, which tend to track to the 10-year Treasury yield, reached a recent peak in January and are unlikely to fall soon.
Home prices are high because there isn’t enough supply. The country has simply not built enough homes to keep up with population growth, and existing homeowners, most of whom have mortgage rates below 4%, have little incentive to sell their existing homes. In June, listings fell 3.2% from the previous month, the biggest month-over-month decline in more than two years, according to Redfin.
“Sellers still have pretty high expectations of what they can get for their homes,” said Joel Berner, a senior economist for Realtor.com. “A lot of them are choosing to delist rather than take drastic price cuts.”
But there are signs that the market is beginning to favor buyers, who have been on the back foot since 2020, when home prices soared during the pandemic. The number of homes on the market is creeping up — last month, inventory was up 16% from June 2024, according to NAR. And the homes that are on the market are taking longer to sell, giving buyers more time to browse. The median time it took for a home to sell in June was 27 days, up from 22 in June 2024, according to NAR.
But “because of the affordability challenges,” Fairweather said, “this doesn’t exactly feel like buyers are really in the driver’s seat.”
This article originally appeared in The New York Times.
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