US existing home sales hit nine-month low in June
- - US existing home sales hit nine-month low in June
July 23, 2025 at 10:02 PM
WASHINGTON (Reuters) -U.S. existing home sales dropped to a nine-month low in June as higher mortgage rates and economic uncertainty keep potential buyers on the sidelines, pointing to a deepening housing market slump.
The report from the National Association of Realtors on Wednesday added to weak single-family homebuilding last month in suggesting that residential investment, which includes homebuilding and home sales through broker commissions, likely remained a drag on the economy in the second quarter.
The housing market is the segment of the economy most sensitive to interest rates. Though housing accounts for less than 5% of gross domestic product, it has a bigger economic footprint through purchases of furniture and appliances and other activity. There are concerns a prolonged decline could spill into the broader economy.
"The housing market wrapped up a sluggish first half of 2025 on a down note as elevated mortgage rates and building softness within the labor market weigh on demand," said Ben Ayers, a senior economist at Nationwide. "Sales activity should continue to be weak over the summer and into the fall as many renters are choosing to wait for lower rates and a more stable economic environment."
Home sales dropped 2.7% last month to a seasonally adjusted annual rate of 3.93 million units, the lowest level since September 2024, the NAR said. Economists polled by Reuters had forecast home resales would slip to a rate of 4.00 million units. Sales were unchanged on a year-over-year basis in June.
Monthly home sales declined in the Northeast, the Midwest as well as the densely populated South, but they rose in the West.
Government data last week showed single-family homebuilding dropped to an 11-month low in June while permits for future construction declined to more than a two-year low.
Data on Thursday is likely to show a moderate rise in new home sales for June, a Reuters survey showed.
The average rate on the popular 30-year fixed-rate mortgage has hovered just under 7% this year after the Federal Reserve paused its interest rate cuts amid concerns that President Donald Trump's protectionist trade policy would stoke inflation.
Trump, who has railed against Fed Chair Jerome Powell for not lowering borrowing costs, said on Tuesday "people aren't able to buy a house because this guy is a numbskull. He keeps the rates too high, and is probably doing it for political reasons."
The Fed is expected to keep its benchmark overnight interest rate in the 4.25%-4.50% range at the conclusion of its policy meeting next week. The U.S. central bank cut rates three times in 2024, with the last move coming in December.
"The Fed will not drop everything and rush to rescue the housing market, a single sector of the economy," said Carl Weinberg, chief economist at High Frequency Economics.
Trump has floated eliminating capital gains tax on home sales to support the housing market.
Weak sales, especially in the Washington, D.C. metro region, which has been the area hardest hit by the Trump administration's deep spending cuts and mass firings of federal government workers, have increased housing supply.
That development has slowed the pace of house price growth, with knock-on effects on household wealth that could hamper consumer spending.
The inventory of existing homes in June increased 15.9% to 1.53 million units from a year ago. At June's sales pace, it would take 4.7 months to exhaust the current inventory of existing homes, up from 4.0 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand. The balance is, however, a combination of low inventory and sales activity.
Still, while the national supply remains below the 1.8 million-1.9 million units before the COVID-19 pandemic, many regions including Washington, D.C., Idaho, Nebraska, Texas and Florida have seen a sharp rise in inventory. But supply remains scarce in some markets like New York.
"Reduced demand for labor has made finding a new job more challenging, which could be leading to both weaker buyer demand and increased forced sales," said Charlie Dougherty, a senior economist at Wells Fargo.
The median existing home price last month increased 2% from a year earlier to a record high of $435,300.
Data from Redfin showed national house prices increased 3.4% on a year-over-year basis in June, the smallest gain in two years. Washington, D.C. led the moderation, with home prices rising 2.9%, sharply down from the 10.9% annual growth rate recorded in March.
Thirty of the 50 metro areas recorded a decline in home prices on a month-over-month basis in June. Annual house prices declined in Tampa, Austin and Dallas.
The NAR report showed properties typically stayed on the market for 27 days last month, compared to 22 days a year ago.
First-time buyers accounted for 30% of sales, up from 29% a year ago. Economists and realtors say a 40% share is needed for a robust housing market. All-cash sales constituted 29% of transactions, up from 28% a year ago.
Despite the stress in some regions, forced sales remain very low. Distressed sales, including foreclosures, made up 3% of transactions, edging up from 2% a year ago. During the 2007-2009 Great Recession, distressed sales accounted for 30% to 40% of transactions.
"We look for sales to move sideways over the balance of 2025 before recovering in 2026 as rate cuts by the Fed get underway in earnest," said Nancy Vanden Houten, lead economist at Oxford Economics.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
Source: “AOL Money”
