US home sales decline amid high loan rates

Existing home sales in the United States declined by 2.4% in June, according to data from the National Association of Realtors (NAR). The annualized rate of sales fell to 4.09 million units, reflecting ongoing concerns about affordability among potential buyers.

The drop in sales coincided with an increase in average mortgage rates. Lawrence Yun, NAR's chief economist, noted that monthly sales activity is highly sensitive to mortgage rate fluctuations, highlighting buyers' affordability challenges. He warned that continued inventory shortages could impact long-term homeownership affordability, despite median home prices reaching historic highs.

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The monthly fluctuations in home sales activity, driven by small swings in mortgage rates, show how sensitive homebuyers are to their affordability.

Samuel Tombs, an economist at Pantheon Macroeconomics, described the existing home sales market as "sluggish" in June due to high borrowing costs. He does not anticipate an immediate recovery, suggesting that the supply of available properties increased, meaning sales are no longer significantly constrained by a lack of homes on the market.

Heather Long, chief economist at Navy Federal Credit Union, pointed to a wealth-driven disparity in the housing market. Sales surged for homes priced at $1 million or more, while the mid-priced and affordable housing segments performed much more modestly. The NAR report also revealed that the median sales price for all types of homes in June was $440,600, with the popular 30-year fixed-rate mortgage averaging 6.49%, up from 6.44% in May.

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Sales surged for homes priced at $1 million or more, but performance for the mid-priced segment, especially affordable homes, was much more modest.