US home prices hit another new high in June on tight supply, while existing home sales fell for a fifth straight month on continued hikes in mortgage rates, according to industry data released on Wednesday.
Sales fell 5.4 percent from May, falling to 5.12 million a year, well below economists’ forecasts, the National Association of Realtors (NAR) reported.
That was the weakest pace of selling since January 2019, barring the start of the pandemic in 2020, NAR chief economist Lawrence Yun told reporters.
After surpassing $400,000 for the first time, the median national home price has continued to rise, reaching $416,000 last month, data showed.
“A combination of higher prices and higher mortgage rates has clearly changed the dynamics in the housing market,” Yun said. “Even people looking to buy are just overpriced given these affordability challenges.”
With inflation rising and American families struggling to make ends meet, the Federal Reserve has raised interest rates aggressively to try to dampen demand and ease pressure. But that has made home unattainable for many.
Separate data from the Mortgage Bankers Association, released on Wednesday, showed that demand for home loans fell 6.3 percent over the past week, the third straight decline.
The Fed is watching the housing market closely for any signs that scorching inflation may be easing.
While sales for homes over $500,000 rose, NAR said there were large double-digit declines in the lower price brackets, reflecting the challenge of affordability and the fact that rising prices are pushing some homes into higher price brackets.
Yun pointed out that price increases are slowing while weaker demand is allowing inventories to build, hitting 2.7 months of supply in June versus just 1.8 months in January.
But, he said, even if the housing market returns to something normal by the end of the year, with “more manageable” price increases, “I don’t see a nationwide price decline.”
Sales fell 14.2 percent compared to June 2021, while the median price rose 13.4 percent, according to the data.
Existing home sales make up 90 percent of the real estate market.
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