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US Existing Home Sales Decline Sharply in June Amidst Persistent High Mortgage Rates

New York, NY – The market for previously owned homes in the United States experienced a notable downturn in June, with sales falling 2.7% from May to a seasonally adjusted,annualized rate of 3.93 million units. This figure significantly missed analyst expectations of a more modest 0.7% decline, according to data released by the National Association of Realtors (NAR).

The disappointing June performance mirrors a market struggling under the weight of elevated mortgage rates. The report, based on closings, reflects contract signings from April and May when the benchmark 30-year fixed mortgage rate frequently hovered above 7% and rarely dipped below 6.8%.

Lawrence yun, chief economist for the NAR, attributed the stagnant sales volume to the “cyclical lows” caused by sustained high mortgage rates. He projected that a reduction in average mortgage rates to 6% could stimulate significant market activity, potentially converting an additional 160,000 renters into homeowners and boosting sales from existing owners. Currently,the average mortgage rate stands at 6.77%, indicating little respite from borrowing costs for prospective buyers.

While sales contracted, housing supply continued to improve. At the end of June, there were 1.53 million units available for sale, marking a ample 15.9% increase year-over-year. This translates to a 4.7-month supply at the current sales pace, still below the 6-month benchmark considered balanced for the market.

Despite the dip in sales volume, the median price of a home sold in June reached a new record for the month, settling at $435,300. This represents a 2% increase from June of the previous year and marks the 24th consecutive month of year-over-year price growth. Yun pointed to years of housing undersupply, exacerbated by construction that has not kept pace with population growth, as the primary driver of these continually rising prices. He also noted that the average homeowner’s wealth has seen a significant boost, increasing by $140,900 over the past five years.

Activity within the market shows a clear bifurcation, with higher-end properties outperforming. Sales of homes priced below $100,000 dropped 5% annually. In contrast, homes in the $100,000 to $250,000 bracket saw a 5% increase, while properties exceeding $1 million experienced a robust 14% jump.

Homes are also spending more time on the market, with an average of 27 days to sell in June, compared to 22 days in June of last year. Notably, higher-priced homes are demonstrating a faster sales velocity than those priced below $500,000.

The composition of buyers also reveals shifts. First-time homebuyers, historically accounting for 40% of sales, represented only 30% in June. The proportion of all-cash deals remained elevated at 29% of transactions, a significant increase from the roughly 20% observed in the pre-Covid era. The average number of offers received per listing also saw a slight decline,averaging 2.4 offers in June, down from 2.5 in May and 2.9 a year prior.

These figures underscore a real estate market grappling with affordability challenges, where demand is being tempered by the high cost of financing, despite signs of improving inventory.

What impact do rising mortgage rates have on the demand for homes, despite demographic trends favoring homeownership?

June Housing Market: Record Prices Meet Declining Sales

National Housing Market Overview – June 2025

June 2025 painted a complex picture for the US housing market. While home prices reached new all-time highs, home sales experienced a noticeable decline. This divergence signals a potential shift in market dynamics, impacting both buyers and sellers. The national median home price hit $435,000, a 3.2% increase year-over-year, according to data from the National Association of realtors (NAR).However, existing-home sales fell 4.1% compared to May and 9.4% compared to June 2024. This creates a challenging environment for navigating the current real estate market.

Key Factors Driving Record Home Prices

Several factors contributed to the continued surge in housing costs during June:

Limited Inventory: The persistent shortage of homes for sale remains the primary driver. New construction is struggling to keep pace with demand, and many homeowners are hesitant to list their properties due to concerns about securing affordable replacement homes. This low housing supply continues to push prices upward.

strong Demand (Despite Affordability Concerns): Despite rising mortgage rates, demand remains relatively strong, particularly among millennials and Gen Z entering the market. demographic trends and a desire for homeownership are offsetting some of the affordability challenges.

Inflation & Building Material Costs: While inflation has cooled somewhat, the cost of building materials remains elevated, impacting the price of new construction and, indirectly, existing homes.

Investor Activity: Institutional investors continue to participate in the market, particularly in certain metropolitan areas, adding to competition and driving up prices.

The Decline in Home Sales: A Closer Look

The drop in home sales isn’t necessarily indicative of a market crash, but rather a recalibration. Here’s a breakdown of the contributing factors:

Mortgage Rate Impact: The average 30-year fixed mortgage rate climbed to 7.15% in June, substantially impacting buyer affordability and cooling demand. This is a key factor in the housing market slowdown.

Affordability Crisis: The combination of high prices and high mortgage rates has created an affordability crisis for many potential buyers,pricing them out of the market.

increased Time on Market: Homes are staying on the market longer than they were in the frenzied pace of 2022 and early 2023. This gives buyers more negotiating power,albeit limited. The average days on market increased to 32 days in June.

Regional Variations: The decline in sales isn’t uniform across the country. Some regions are experiencing more significant drops than others.

Regional Housing Market Performance – june 2025

Here’s a snapshot of how key regions performed in June:

northeast: Experienced a modest increase in prices (1.8%) but a steeper decline in sales (-7.2%).

Midwest: Showed relative stability, with prices up 2.5% and sales down 3.5%.

South: Continued to see strong price growth (4.1%) but also a significant drop in sales (-8.9%).

West: The most volatile region, with prices up 3.7% and sales down a ample 11.5%. California and Washington state saw particularly sharp declines in transaction volume.

Impact on Buyers and Sellers

The current market presents unique challenges for both buyers and sellers.

For Buyers:

Increased Negotiating Power: While still competitive, buyers have slightly more leverage than they did in the past year.

More Inventory (Slightly): The increase in days on market means more choices, though inventory remains constrained.

Careful Budgeting: Thoroughly assess affordability and factor in potential future rate increases. Consider adjustable-rate mortgages (ARMs) cautiously.

Be Patient: don’t rush into a purchase. Take the time to find the right property at the right price.

For Sellers:

Realistic Pricing: Overpricing is a major mistake in the current market. Price competitively based on recent comparable sales.

Home Planning: Invest in staging and necessary repairs to make your property stand out.

* Consider Incentives: Offering concessions, such as covering closing costs or providing a home warranty, can attract buyers.