Resales Buckle Under the Weight of Higher Mortgage Rates
Source: Economics Group of Wells Fargo Bank, N.A.
Existing Sales Decline for the Fifth Straight Month
- Total existing home sales surprised to the downside and dropped 5.4% to a 5.12 million-unit pace in June.
- June marks the fifth consecutive monthly decline for resales, which are now down 14.2% over the past year.
- Single-family sales fell 4.8% to a 4.57 million unit pace, while condo and co-op sales dipped 9.8% to a 550K-unit pace.
- Higher mortgage rates are the major factor driving the pull-back in home buying activity. According to Freddie Mac, the average 30-year commitment rate was 5.52% in June, up from 5.23% in May.
- The drop in resales has allowed inventories to rise. The inventory of unsold existing homes increased to 1.26 million in June, still remarkably low by historical standards but a 9.6% monthly gain.
- The improvement in supply and cool-down in demand is leading to some moderation in home price gains. The median existing single-family home price rose to a new high of $423,300 in June. The gain translates to a 13.3% year-over-year rise, which is somewhat softer than the 14.6% gain registered in May.
- According to the National Association of Realtors, homes continue to sell very quickly. For-sale homes lasted just 14 days on the market during June, the fewest on records dating back to 2011.