June proved to be an excellent example of the contrast that is creating a confusing housing market right now. Despite home prices hitting all-time highs, sales activity stayed muted. The median sales price of June homes sold was $435,300, up 2% year over year. The market remains incredibly tight even as prices increase. There is just a 4.7-month supply of homes on the market at the sales rate.
As of June, houses on the market are getting an average of 2.4 offers each. That’s down a notch from 2.5 offers in May, and a larger decline from 2022’s average of 2.9 offers. This does reflect a real cooling on demand, despite the reality that homes over a half million dollars still sell more quickly than homes listed under $500,000. Even homes over $1 million experienced a stunning 14% increase. At the same time, earners between $100,000 and $250,000 rose by 5%. In contrast, houses only under $100K dropped 5% per year.
On average, homes are selling in just 27 days. This significant jump indicates that buyers are spending more time doing their due diligence. First-time buyers represented 30% of June sales, down from the historical average of 40%. This trend is alarming when considering the accessibility for first-time homebuyers looking to enter the market.
In the words of Lawrence Yun, Chief Economist at the National Association of Realtors, “for all the qualified buyers out there, it’s quite challenging.”
“High mortgage rates are causing home sales to remain stuck at cyclical lows,” – Lawrence Yun
Supply keeps growing, with 1.53 million units for sale at the close of June. Analysts warn that several years of undersupply are what’s fueling today’s high prices. Yun added further insights into this issue.
“Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market,” – Yun
Homeownership has been a solid wealth creator for a huge number of homeowners – an average of a whopping $140,900 just in the last five years. Unfortunately, today, first-time buyers and people looking for affordable homes to buy are hugely disadvantaged in a fierce market.