Experiencing a staggering plunge of 5.4% in June 2024, existing home sales in the United States took a nosedive, presenting the most drastic monthly drop since November 2022. This sharp decline is a testament to the hesitancy plaguing potential buyers, aggravated further by the fact that the median sales price soared to a historic peak for the second consecutive month.
Throughout June 2024, sales figures totaled a meager 3.89 million units, a stark reduction from May’s 4.11 million units, as per data unveiled by the National Association of Realtors (NAR) on Tuesday. Year-over-year comparisons reveal a symmetrical 5.4% decrease, painting a grim picture of declining market vitality.
Reaching an unprecedented pinnacle, the median existing-home price across all housing types in June stood at a towering $426,900, signifying a notable 4.1% surge from the previous year’s $410,100.
Dwelling on the statistical landscape further, the total housing inventory at the close of June tallied 1.32 million units, reflecting a 3.1% escalation from May and a substantial 23.4% leap from the analogous period last year (1.07 million units). Unsold inventory manifests as a 4.1-month supply at the present sales pace, an uptick from 3.7 months in May and 3.1 months in June 2023.
Lending his perspective to the tumultuous real estate domain, NAR’s chief economist Lawrence Yun observed a perceptible transition from a seller’s market to one favoring buyers. Yun stated, “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
Unveiling Regional Real Estate Performance
Across all four U.S. regions, a synchrony of sales declines and price escalations unfolded, painting a comprehensive picture of the market dynamics.
- Within the Midwest, existing-home sales plummeted by 8% from the previous month to an annual pace of 920,000 units in June, marking a 6.1% slump from the corresponding period last year. The median price in this region stood at $327,100, reflecting a robust 5.5% surge from June 2023.
- Riding the tide of declining sales, the South paved a similar path, with existing-home sales dwindling by 5.9% from May to an annual pace of 1.76 million units in June, representing a 6.9% drop from a year earlier. The median price experienced a modest uptick in the South, settling at $373,000, marking a 1.7% increase from the previous year.
- Meanwhile, in the West, existing-home sales faltered by 2.6% during June, stabilizing at an annual rate of 740,000 units, a figure mirroring the performance of the preceding year. The median price in this region elevated substantially to $629,800, reflecting a notable 3.5% increase from June 2023.
- Finally, in the Northeast, a 2.1% reduction in existing-home sales transpired from May, landing at an annual rate of 470,000 units in June, a sharp 6% plummet from June 2023. Noteworthy price hikes were noticeable in the Northeast, with the median price reaching $521,500, showcasing a substantial 9.7% upsurge from the prior year.
A Look Into Buyer Trends and Mortgage Rates
Intriguing insights emerged as properties lingered on the market for 22 days in June; a slight reduction from May’s 24 days yet a palpable jump from 18 days in June 2023, as indicated by the monthly Realtors Confidence Index.
Breaking down the buyer demographics, first-time buyers constituted 29% of sales in June, a mild dip from 31% in May but afforded an uptick from 27% in June 2023. Interestingly, NAR’s 2023 Profile of Home Buyers and Sellers – unveiled in November 2023 – disclosed that the annual share of first-time buyers bound at 32%.
Marking a significant influence on market dynamics, Freddie Mac unveiled that the 30-year fixed-rate mortgage averaged 6.77% as of July 18, marking a dip from 6.89% a week prior and 6.78% during the equivalent timeframe a year ago.
Casting a glance at transaction specifics, all-cash sales accounted for 28% of transactions in June, retaining an unaltered stance from May and displaying an upsurge from 26% a year ago. Accentuating this frontrunner position of all-cash sales, individual investors or second home buyers comprised 16% of home purchases in June; a static figure from May but witnessing a gradual slide from 18% in June 2023. While distressed sales – encompassing foreclosures and short sales – sustained a 2% share of sales in June, preserving uniformity from the preceding month and year.
Market Response and the Vanguard Real Estate ETF
In a whirlwind of market activity, real estate stocks, meticulously tracked by the Vanguard Real Estate ETF, demonstrated a meager 0.4% ascent on Tuesday, painting a picture of market resilience and poised to culminate the session at elevated levels harkening back to February 2023.
Leading the charge within the sector were titans like Opendoor Technologies Inc., Compass, Inc., and eXp World Holdings, Inc., each marking gains registering between 3% and 3.5%.
In stark contrast, NexPoint Diversified Real Estate Trust, Office Properties Income Trust, and Alexandria Real Estate Equities, Inc., trailed behind as the sector laggards, experiencing depreciations of 3.5%, 2.9%, and 2.6%, respectively.