Existing Home Sales Resume Slide, Down 15 of the Last 17 Months – MishTalk

There was a tiny bounce in existing-home sales in May and a big bounce in February. Otherwise, it has been all downhill since February of 2022.

The National Association of Realtors^® NAR^® reports Existing-Home Sales Retreated 3.3% in June.

Existing-Home Sales Highlights

• Existing-home sales dropped 3.3% in June to a seasonally adjusted annual rate of 4.16 million. Sales trailed off by 18.9% from one year ago.
• At $410,200, the median existing-home sales price for June was the second-highest price ever recorded – since January 1999 when NAR began tracking the data – and 0.9% less than the all-time high from one year ago of $413,800. It was the third time the monthly median sales price eclipsed $400,000, joining June 2022 and May 2022 ($408,600). 
• At 1.08 million at the end of June, the inventory of unsold existing homes was unchanged from the previous month, or the equivalent of 3.1 months’ supply at the current monthly sales pace.
• First-time buyers were responsible for 27% of sales in June, down from 28% in May and 30% in June 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 2022 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.
• All-cash sales accounted for 26% of transactions in June, up from 25% in both May 2023 and June 2022.

Existing Home Sales Seasonally Adjusted 

Existing-Home Sales Month’s Supply

Existing Home Sales Long Term

Transaction Crash

Existing home sales have crashed to a level seen in the mid 1990s. Prices have not crashed but transactions have.

People who want to move are effectively trapped in their houses because they do not want to trade a sub-3% mortgage for a 7.0% mortgage.

The bidding wars we do see are from people who are price insensitive. They make for amusing anecdotes but the above chart shows the real picture.

This crash is likely to last longer because intertest rates are likely to stay higher for longer because the Fed fears stoking more inflation.

Home sales mean appliance sales, new furniture, cabinets, new carpet, landscaping, etc. Who doesn’t spend a lot more money when they move into a new home?

Financial Stress

Note that 70 Percent of Americans are Financially Stressed, 58 Percent Live Paycheck to Paycheck

The naïve view is that housing cannot crash unless prices crash.

The reality is transactions have crashed, and weak home sales portend a weak economy for a long time.

For further discussion, please see The Starter Home Is No More, Even in Second Tier Markets