Record High Home Prices Amidst Slumping Housing Market
Although the national housing market continues to slump and fewer people bought homes last month, home prices still hit a record high in June, highlighting an affordability crisis. The national median sales price rose 4.1% from a year earlier to $426,900, the highest level on record since 1999. Sales of previously owned homes fell for the fourth consecutive month, indicating a challenging market for homebuyers.
Decline in Existing Home Sales
The National Association of Realtors (NAR) reported a 5.4% decrease in U.S. existing home sales last month compared to May, with a seasonally adjusted annual rate of 3.89 million units. This marks the fourth consecutive month of declines, as existing home sales also fell 5.4% compared to June last year. The latest sales figures fell short of economists’ expectations, pointing to ongoing challenges in the housing market.
Shift Towards Buyer’s Market
Despite record home prices, the recent increase in housing inventory suggests a potential shift towards a buyer’s market. Lawrence Yun, chief economist for the National Association of Realtors, notes a slow transition from a seller’s market to a buyer’s market. Homes are staying on the market longer, sellers are receiving more offers, and inventory is increasing nationwide. However, sellers continue to benefit from the current tight housing market, with properties selling quickly and often above the list price.
Currently, there is an increase in inventory, but sales have not yet seen a corresponding increase. As prices rise, owning a home becomes a greater challenge for Americans, especially first-time homebuyers. High mortgage rates and rising prices remain significant obstacles for buyers, but there is optimism that increased supply and a potential decrease in borrowing costs could positively impact home sales.
Outlook for the Housing Market
The U.S. housing market has been in a downturn since 2022, with increasing mortgage rates impacting sales. As the Federal Reserve considers cutting interest rates later this year, there is hope for some relief. Economists predict that with falling mortgage rates and increased supply, home sales may see improvement and potentially lead to a softening in home prices. However, challenges remain for many buyers who may be squeezed out of the market due to current economic conditions.