US home prices hit all-time high as sales slow and mortgage rates rise

Sales of previously occupied US homes slowed in June, but a key measure of home prices climbed to an all-time high, adding to affordability challenges for prospective home buyers.
Existing home sales fell 2.4 per cent last month from May to a seasonally adjusted annual rate of 4.09 million units, the National Association of Realtors (NAR) said on Thursday. Sales rose 2.8 per cent compared with June last year.
The latest sales tally fell short of the roughly 4.21 million pace economists were expecting, according to FactSet.
Home sales have been mostly hovering close to a 4-million annual pace going back to 2023, far short of the historic norm that is closer to 5.2-million.
Sales have remained sluggish as mortgage rates have mostly trended higher in the months since the war between the US and Iran started. Expectations of higher inflation amid surging oil prices have pushed up the long-term bond yields that lenders use as a guide to pricing home loans, causing mortgage rates to climb. Still, mortgage rates remain below where they were a year ago.
Despite the lacklustre sales, home prices continued to rise nationally last month. The US median sales price increased 1.8 per cent in June from a year earlier to US$440,600, an all-time high on data going back to 1999, NAR said. Home prices have risen on an annual basis for 36 months in a row.
First-time buyers accounted for 33 per cent of home purchases last month, down from 35 per cent in May and up from 30 per cent in June last year. Historically, they made up 40 per cent of home sales.
“Without a doubt, the affordability is a major challenge for people who want to become homeowners, which is the reason why we need more supply,” said Lawrence Yun, NAR’s chief economist.
The US housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied US homes were essentially flat last year, stuck at a 30-year low.
Through the first half of this year, seasonally adjusted sales of existing US homes are up only 0.7 per cent, compared to the same period in 2025.
Years of soaring home prices, especially in the early part of this decade when rock-bottom mortgage rates fuelled a buying frenzy, have left many would-be home buyers frozen out of the market. And a chronic shortage of homes for sale nationally, due partly to years of below-average new home construction, has helped prop up home prices even in a multi-year sales slump.
Many of the homes purchased last month likely went under contract in April and May, when the average rate on a 30-year mortgage ranged from 6.23 per cent to 6.53 per cent — the highest level going back to late August, according to mortgage buyer Freddie Mac.
Those who can afford to buy at current mortgage rates or pay all cash are likely to encounter buyer-friendly trends in many markets. In June, median list prices fell 2.5 per cent from a year earlier, the steepest annual drop on data going back to 2017, according to Realtor.com.
Still, housing market pricing trends vary widely regionally and locally. Consider, since peaking in 2022 at US$449,000, list prices have come down 7.3 per cent in  the West and 3.5 per cent in the South, but are up 10 per cent in the Midwest and 12.6 per cent in the Northeast, according to Realtor.com.
Meanwhile, home shoppers have more homes on the market to choose from than this time last year, although home inventory levels remain well below historical norms.
There were 1.56 million unsold homes at the end of last month, down 0.6 per cent from May and up 1.3 per cent from June last year, NAR said. That’s still well short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic.
June’s month-end inventory translates to a 4.6-month supply at the current sales pace. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers. 
AP