In a continuation of the rising trend, U.S. home prices reached a new peak in June 2024 for the second consecutive month, reflecting a persistent shortage of available homes and high demand. The median price for existing homes climbed to an unprecedented $426,900, marking a 4.1% increase from the previous year, according to data from the National Association of Realtors (NAR).
Despite this surge in home prices, the market is facing significant challenges. Sales of existing homes declined for the fourth consecutive month, dropping 2.8% year-over-year to an annualized rate of 4.11 million units. This decline is attributed to a combination of high prices and elevated mortgage rates, which have made homeownership less attainable for many potential buyers.
Outstanding Pandemic Housing Boom gains
Shift in county-level home prices between March 2020 and June 2024
Anyone can access the interactive data at this link:https://t.co/frazLwp5VS pic.twitter.com/7IEJfyBqYP
— ResiClub (@ResidentialClub) July 23, 2024
The spring homebuying season, traditionally the busiest time of year, was notably slow, with low inventory exacerbating the issue. Lawrence Yun, chief economist at NAR, stated that while increasing inventory levels should eventually temper home price growth, this has not yet materialized. In May 2024, the market had 1.28 million homes for sale, up 6.7% from April, providing 3.7 months of supply at the current sales pace.
Regionally, the Northeast saw the highest home-price growth, with a 9.2% increase from the previous year, even as sales in the region dropped by 4%. The West, Midwest, and South also experienced robust price gains, with the Midwest being the only region to see a year-over-year increase in sales.
IS THE US HOUSING MARKET CRACKING?
19.8% homes for sale had a price cut in June, the most in any June on RECORD.
Sellers are slashing prices as homes are sitting long on the market and getting stale, according to Redfin.
This comes due to the WORST affordability in history. pic.twitter.com/zTBy2M67AP
— Global Markets Investor (@GlobalMktObserv) July 25, 2024
Higher mortgage rates have played a crucial role in this dynamic. With average rates hovering above 7%, many potential buyers have found it increasingly difficult to afford new homes. This has resulted in a slowdown in market activity, with first-time buyers making up only 31% of sales in May, down from 33% in April.
The impact of these rising costs is felt across the board. All-cash transactions, often indicative of investor activity, rose to 28% of sales, up from 25% a year ago.
Individual investors and second-home buyers accounted for 16% of the market, reflecting a slight increase from the previous year.
Experts suggest that the Federal Reserve's upcoming decisions on interest rates will significantly influence the housing market's trajectory. A potential rate cut in September could ease mortgage rates, providing some relief to homebuyers and possibly stimulating sales
