U.S. Existing Home Sales (June 2024)
Admir Kolaj, Economist | 416-944-6318
Date Published: July 23, 2024
- Category:
- U.S.
- Data Commentary
- Real Estate
U.S. Existing Home Sales fell sharply in June, bringing sales back near 2023 lows
- Existing home sales fell 5.4% month-on-month (m/m) to 3.89 million units (annualized) in June, coming in below the market consensus forecast for a slightly more moderate decline of 3.2%.
- Single-family home sales fell 5.1% to 3.52 million units, while sales in the smaller condo/co-op segment fell 7.5% to 370k units.
- Activity retreated across all Census regions, with sales falling 8% (m/m) in the Midwest, 5.9% in the South, 2.6% in the West and 2.1% in the Northeast.
- Total housing inventory in June was 1.32 million units, up 3.1% from May and 23.4% from one year ago. Measured at the current sales rate and seasonally adjusting, unsold inventory sat at 3.8 months' supply – up from 3.5 months in May and 2.9 months in June 2023.
- House prices were up 4.1% from a year ago, a deceleration from 5.2% (y/y) in the month prior. On a seasonally adjusted basis, median home prices retreated mildly, falling 0.2% m/m – only partially reversing the 0.6% gain in the month prior (seasonal adjustment performed by TD Economics).
Key Implications
- The U.S. housing market remains in a tough spot, with existing home sales continuing to trail below historical norms and ending the second quarter on a sour note. This is not entirely surprising given the prevailing higher interest rate environment, with 30-year mortgage rates still hovering just below 7%. While demand is sluggish, it's worth noting that supply has improved somewhat over the past year. Nonetheless, the market remains relatively tight – with the months supply still below 4 months – something that has allowed prices to continue trending moderately higher for the time being.
- Assuming that the improving inventory trend continues, increased choice among buyers should help unlock more sales activity down the road. Another very important piece to the housing puzzle – interest rates – are expected to remain restrictive for the time being but should improve later this year. Indeed, with inflation and average hourly earnings showing signs of cooling recently, a continuation of these trends would set the stage for the Fed to begin cutting rates potentially this autumn, with long-term borrowing rates to ease accordingly.
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