Prices Still at Record Highs But National Sales Down-Is This Weird?
Existing-home sales saw a decline in June, with every sales region across the country reporting drops in year-over-year sales. However, according to the National Association of Realtors (NAR), month-over-month sales were more variable, with increases in the Northeast, decreases in the South and West, and stability in the Midwest. Home prices, meanwhile, held firm in most regions of the country. According to Lawrence Yun, chief economist for NAR, “limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month.”
Who’s Buying Homes?
First-time buyers accounted for 27% of all sales in June, down from 28% a month earlier and 30% a year earlier. All-cash sales, meanwhile, made up 26% of all transactions, up from 25% both a month ago and a year ago. Two groups responsible for many all-cash purchases—namely, individual investors and second-home buyers—saw potential in the housing market; these groups purchased 18% of homes in June, up from 15% in May 2023 and 16% in June 2022. The average property remained available for sale for 18 days in June 2023, unchanged from a month earlier and up from 14 days a year earlier. Of all the homes sold in June, 76% were available for under one month.
Twice as Much Inventory Needed
Although the first half of 2023 was negative for the housing market, with sales down by 23%, economists believe change is coming. “Fewer Americans were on the move despite the usual life-changing circumstances,” Yun hypothesized. “The pent-up demand will surely be released soon, especially if mortgage rates and inventory move favorably.” Yet, by the end of June, total housing inventory sat at 1.08 million units, unchanged from May and down 13.6% from June 2022. At the current sales pace, this level of inventory would supply the market for 3.1 months, up from a 3-month supply in May and down from a 2.9-month supply in June 2022. For market conditions to improve, there needs to be an increase in inventory; according to Yun, the “market can easily absorb a doubling of inventory.”
Northeast – Existing-home sales annual rate of 510,000; an increase of 2% from May 2023 but a decrease of 21.5% from June 2022. The median sales price of $475,300 represented an increase of 4.9% from June 2022.
Midwest – Existing-home sales annual rate of 990,000; unchanged from May 2023 but a decrease of 19.5% from June 2022. The median sales price of $311,800 represented an increase of 2.1% from June 2022.
South – Existing-home sales annual rate of 1.91 million; a decrease of 5.4% from May 2023 and 16.2% from June 2022. The median sales price of $366,600 represented a decrease of 1.2% from June 2022.
West – Existing-home sales annual rate of 750,000; a decrease of 5.1% from May 2023 and 22.7% from June 2022. The median sales price of $606,500 represented a decrease of 3.4% from June 2022.