Sales of existing homes are falling to one of the slowest since 2010

US existing home sales fell in June to one of the slowest levels since 2010 as sellers wait for mortgage rates to fall further and buyers hesitate at persistently high prices.

The number of contracts fell 5.4% from May to an annual rate of 3.89 million, according to data released Tuesday by the National Association of Realtors. That was the fourth consecutive decline and interest rates lagged behind all estimates from the Bloomberg survey of economists.

The delay came as prices reached another record in June, with the average sales price increasing 4.1% to $426,900. Surprisingly, even as more supply has come onto the market in recent months, prices are rising, but inventory is still low by historical standards.

There were 1.32 million homes for sale in June, the highest since October 2020, but still well below the 1.9 million listed before the pandemic in June 2019. That means that at the current sales pace it would take 4.1 months to exhaust that supply. , the longest in four years.

“Even as the average home price has reached a new record, further major accelerations are unlikely,” NAR chief economist Lawrence Yun said in a statement.

Waiting for Fed

Both buyers and sellers are enthusiastic about the Federal Reserve to start lowering interest ratess after holding them at a twenty-year high last year. In recent months, inflation has shown increasing signs of easing and unemployment has risen, almost certainly increasing market chances that the Fed will cut spending in September and December.

The trend has driven down mortgage rates, with the rate on 30-year contracts falling to 6.87% in the week ending July 12, down from this year’s peak of 7.29% in April, figures from the Mortgage Bankers Association. However, that is still double the level at the end of 2021.

About 65% of homes sold were on the market for less than a month in June, compared to 67% in May, while 29% were sold above the list price. Properties stayed on the market for an average of 22 days in June, compared to 24 days in May, NAR’s report said.

While record high prices hardly indicate this is a buyer’s market, Yun said it is slowly disappearing from a seller’s market. Fewer buyers are forgoing inspections now compared to a year ago, and homes are taking a little longer to sell, but overall it’s still moving quickly, he said.

Existing home sales represent the largest share of the U.S. total and are calculated when a contract is closed. The government will publish the sales figures for new homes for June on Wednesday.