The real estate market saw a dip in June, with existing home sales falling by 3.3% month-on-month to 4.16 million, falling short of the expected 4.20 million and slightly lower than May’s 4.30 million. Additionally, on a year-on-year basis, existing home sales experienced a significant drop of 18.9%. Despite these figures, experts anticipate pent-up demand to surface in the near future, especially if mortgage rates and inventory remain favorable.
The National Association of Realtors’ Chief Economist, Lawrence Yun, attributed the slowdown to fewer Americans relocating, despite the usual life-changing circumstances that drive home sales. However, he remains optimistic about the pent-up demand being realized soon, sparking a potential rebound in the market.
The median existing-home price in June surged to $410.2K, climbing from $396.1K in May. This marks the second-highest price recorded since January 1999 when NAR started tracking the data. The price appreciation reflects the ongoing imbalance between supply and demand in the market, prompting intensified competition among buyers.
Speaking of supply, the inventory of unsold existing homes remained unchanged at 1.08 million, equivalent to a 3.1 months’ supply at the current monthly sales pace. The limited supply continues to create multiple-offer situations, with Yun reporting that one-third of homes were sold above the list price in the latest month.
The housing starts and building permits data released on Wednesday offer additional insight into the state of the real estate market. It remains to be seen how new construction could impact the overall housing market dynamics in the coming months.
In conclusion, June saw existing home sales experience a slight decline, partially due to decreased mobility among Americans. However, experts remain hopeful that pent-up demand will reinvigorate the market, especially if favorable mortgage rates and inventory conditions persist. Nevertheless, the persistent supply-demand imbalance continues to drive home prices higher, presenting challenges for prospective buyers. As the housing market continues to evolve, upcoming data, including housing starts and building permits, will shed further light on the sector’s trajectory in the latter half of 2023.