The home market remains stagnant, with buyers seeking better bargains and lower mortgage rates and sellers refusing to accept bids below their asking prices.
Existing home sales declined 2.7% to 3.93 million per year, falling short of the usual market rate of 4 million. That fell short of the expected 0.7% drop.
Mortgage rates, however, rose to 6.84% for the benchmark 30-year fixed-rate loan. Demand for new mortgages increased by 0.3% last week and is 22% higher than a year ago. However, refinancings, which are more vulnerable to interest rate changes, decreased by 0.3%.
Home prices continued to rise, but at a slower pace than in previous years. The median sales price of $435,300 increased 2% from the previous year, marking the second consecutive year of yearly growth. Higher-priced homes sold better than lower-priced properties, with cash sales jumping to 29% of contracts, up from 27% in May.
“The record high median home price highlights how American homeowners’ wealth continues to grow – a benefit of homeownership,” said Lawrence Yun, Chief Economist of the National Association of Realtors. “The average homeowner’s wealth has expanded by $140,900 over the past five years.”
Real estate analysts say the market is now balanced, but this is a significant departure from the previous several years, when sellers dominated the conditions of deals.
“The housing market is in balanced territory after nearly a decade of seller-friendly conditions, which means buyers, sellers, and the industry must adjust to the new norm,” Realtor.com Chief Economist Danielle Hale said in an analysis released ahead of the report. “Although the structural housing shortage remains a concern, and slow single-family construction will exacerbate it in the medium term, the financial considerations for many households deciding whether to rent or buy are heavily skewed toward renting, with an estimated $900 per month advantage as of June. This helps to explain the lower demand in the for-sale market.”
“The long run advantages of owning a home are still well-understood by consumers who continue to look for opportunities, but amid still-elevated mortgage rates and home prices, many of today’s buyers are approaching a home purchase with a fair amount of patience,” according to Hale.
Interest rates remain high, despite President Donald Trump’s calls for them to be reduced. Federal Reserve Chairman Jerome Powell has stated that the central bank cannot decrease interest rates until more evidence is available on the impact of Trump’s proposed import tariffs.
The taxes, introduced with pomp in April, have been continually postponed and altered. On Tuesday, Trump announced a “massive” agreement with Japan to set tariffs at 15%. China, a crucial trading partner, is now negotiating with the United States and has until August 12 to reach an agreement.
However, with a stable labor market and a thriving stock market, consumers can take on debt as home prices stabilize and even fall in key Southern regions like Tampa.
