Signs of housing market slowdown mount in June data

Record-setting price appreciation and housing demand of the past two years has peaked and inventory is increasing, new research suggests.

While homes sold more rapidly in June than in any other month this year, the volume of business is significantly below levels of a year ago, according to real estate franchise network Remax. Home sales increased on a monthly basis by 4.7% in June, the highest point in 2022. But numbers were down year over year by 17.6%, and none of the 53 metropolitan areas surveyed by Remax reported a sales percentage increase from last June. 

Markets experiencing the largest drops in sales compared to the same period in 2021 were Miami at 35.1%, San Diego with a 33.1% drop, and Coeur d'Alene, Idaho, at 32.2%

And while sales went up for the month, nationwide expansion of inventory increased for the third month in a row. Supply surged 34.1% over May numbers and 27.5% compared to June 2021.

New listings helped drive June’s inventory up 7.7% from May and 1.6% from a year ago. Phoenix led the nation with the largest increase of new listings compared to last year at 34.1%, far outpacing Nashville, Tennessee, at 22.8% and Philadelphia with 21.8%.  

"The market is moving toward greater balance,“ said Remax CEO and President Nick Bailey in a press release. While due in part to quickly rising interest rates suppressing buyer demand, even more significant to the balance “is the increase in listings after several years of instant sales and low inventory.” 

Price cuts are also showing up more frequently in the latest housing data.

Sellers lowered asking prices 3% on average from a May peak for the four-week period ending July 10, according to real estate data from Redfin. The share of properties whose prices declined during the same period also rose to 7.1%, the most at any time since at least 2015. 

While the recent reversal of price trends could spell opportunity for aspiring buyers squeezed out of the market over the past two years, the developments that are driving the changes also stand as obstacles to potential homeowners, said Redfin Chief Economist Daryl Fairweather.

”Inflation and high mortgage rates are taking a bite out of home-buyer budgets,“ she said in a press release. “Few people are able to afford homes costing 50% more than just two years ago in some areas, so homes are beginning to pile up on the market. As a result, prices are starting to come down from their all-time highs.” 

According to Remax’s report, median housing costs went up across the country but at a more muted pace compared to the home-price surges reported by many earlier this year. The median sales price increased to $428,000 in June, up 0.6% from May and 11% one year ago. 

The supply of available housing for sale based on June’s transaction pace has now risen to 1.4 months' worth, compared to 0.9 in May and one in June 2021. 

While some industry watchers see the changes taking place as rightsizing toward a normalized market, it may still be some time until the right balance is achieved. 

“We expect this environment of reduced competition and declining home prices to continue for at least the next several months,” Fairweather said.