Blitz Bureau
Sales of existing homes slumped sharply in June, falling by 5.4% from May, even as the price of a median home hit a new record, the National Association of Realtors said on Tuesday.
The median sales price is now $426,900. The report captures the reality of a housing market stuck with high mortgage rates and high prices, making it unaffordable for first-time buyers and keeping existing homeowners from selling their houses as they sit on low-rate mortgages.
Rising inventory
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR Chief Economist Lawrence Yun. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” Mortgage rates have dipped recently on expectations the Federal Reserve will cut interest rates at its September meeting. On July 26, the government will release the personal consumption expenditures price index – a lesser known measure of inflation that the Fed watches closely – with forecasts calling for it to show continued easing of inflation.
“Although mortgage rates crested in early May, topping out at 7.22%, they remained above 7% for the better part of the month – when many June homebuyers would have needed to lock in a mortgage rate,” said Danielle Hale, chief economist at Realtor.com. “Combined with still high and climbing home prices, elevated costs meant that fewer buyers were able to get to the closing table in June.”
Businesses turn cautious
The economy has entered a period of some uncertainty as it slows down and, along with it, the labour market eases into a greater balance between supply and demand. But the coming presidential election – and the stunning withdrawal of President Joe Biden from the contest on Sunday – has some businesses and consumers turning cautious.
Inflation has dogged Biden since it began to surge in late 2021. As his vice president, Harris will have difficulty distancing herself from the economic record of the last three years, although leaving inflation aside the economy has performed well during that time with low unemployment, rising wages and strong consumer spending.
