Overview: Mortgage rates rose sharply following the June 16 Federal Reserve meeting, but they have recovered from most of that increase. The only major economic reports released over the past week were from the housing sector, and they caused little market reaction.
Existing-home sales, which make up about 90% of the market, had remained at very high levels since bouncing back from the pandemic-related shutdowns last spring. However, sales now have dropped modestly for four straight months, mostly due to affordability issues and a lack of inventory in many regions. Unfortunately, additional supply may be slow to arrive, as home builders say that rising prices and shortages for land, materials, and skilled labor are restraining their pace of construction.
In May, existing-home sales fell slightly from April, but still were 45% higher than a year ago. The median existing-home price was 24% higher than last year, at a new record of $350,300. Inventory levels were down 21% from a year ago and remained near the lowest since 1982. The number of homes for sale was at just a 2.5-month supply nationally, well below the 6-month supply that is considered a healthy balance between buyers and sellers.
The latest results for new-home sales, which account for the remainder of the market, were even weaker. In May, new-home sales fell 6% from April to the lowest level since May of last year. The median new-home price of $374,400 was 18% higher than last year. In general, the pace of both new and existing sales is being driven by the supply of homes available each month.
Existing-Home Sales (millions)
June 25 — Core Personal Consumption Expenditures (PCE) Price Index
July 1 — Institute for Supply Management (ISM) Manufacturing Index
July 2 — Employment Report