Record-Low Inventory and Surging Demand Propel Home Prices to Yearly Peak

Persistent shortages of available homes for sale, along with robust demand from homebuyers, drove property prices in June to their highest peak within a year. June's total inventory of homes for sale decreased by 13.6% year-over-year, amounting to 1.08 million units. The supply of single-family homes reached an unprecedented low for June, with only 960,000 units available.?As per the other week's report from the National Association of Realtors (NAR), sales of pre-owned homes dipped 3.3% to a yearly rate of 4.16 million in June.

Home sales were at their slowest in the previous six months, with January 2023 being the reference point. Notably, the 4.16 million sales is the lowest recorded rate for June since the 2009 sub-prime lending crisis.

These declining sales did not meet the expectations of Wall Street economists, who predicted existing-home sales to reach 4.2 million in June. Compared to June 2022, home sales have declined by 18.9%.

In terms of pricing, the median price of an existing home in June was $410,200. This figure is the second-highest recorded by the NAR since they began collecting data in 1999. The highest median price of $413,800 was observed in June last year.

The number of homes on the market stagnated at 1.08 million units in June, 960,000 of which were single-family homes. This inventory number is the lowest recorded for June since the NAR started tracking data in 1982.

Homes listed for sale remained in the market for an average of 18 days, mirroring the previous month's data. In comparison, homes only lasted 14 days on the market in June of the previous year.

Sales of existing homes across the US varied: a 2% increase was observed in the Northeast, while other regions reported steady or declining home sales. Transactions made in cash comprised 26% of all sales, with individual investors and second-home buyers accounting for 18%. First-time homebuyers made up 27% of the sales.

Despite recovery signs in the housing market, the sustainability of these trends is still being determined due to the persistent low inventory. Amidst nearly 7% mortgage rates, many home sellers have hesitated to put their homes up for sale. Although builders are escalating home construction rates, newly built homes might not sufficiently address the existing supply shortage.

High home prices, as highlighted by the NAR, coupled with soaring rates, are making homeownership out of reach for numerous Americans.

The NAR's chief economist, Lawrence Yun, commented on the market's difficulty for buyers due to the lack of homes for sale. He emphasized that even a doubling the inventory could be absorbed by the market without difficulty. Buyers often face multiple offers, with a third of all homes selling above the listing price.

Early Thursday trading witnessed mixed performances in the stock market, with the yield on the 10-year note climbing above 3.8%.

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