US existing-home sales drop to one of slowest paces since 2010
EXISTING-HOME sales in the US slumped to one of the slowest paces since 2010 in June, as sellers wait for mortgage rates to fall further and buyers balk at stubbornly high prices.
Contract closings decreased 5.4 per cent from May to a 3.89 million annualised rate, data released on Tuesday (Jul 23) from the National Association of Realtors (NAR) show. That marked the fourth straight decline and the rate trailed all estimates in Bloomberg survey of economists.
The slowdown came as prices reached another record in June, with the median sales price up 4.1 per cent to US$426,900. Surprisingly, prices are growing even as more supply has hit the market in recent months, but inventory is still low by historical standards.
In June, there were 1.32 million homes for sale, the most since October 2020 but still well below the 1.9 million that were listed before the pandemic in June 2019. That means at the current sales rate, it would take 4.1 months to exhaust that supply, the longest in four years.
“Even as the median home price reached a new record high, further large accelerations are unlikely,” NAR Chief Economist Lawrence Yun said in a statement.
Buyers and sellers alike are eager for the Federal Reserve to start cutting interest rates after keeping them at a two-decade high for the past year. In recent months, inflation has shown more signs of cooling and unemployment has risen, boosting market odds to near-certainty that the Fed will cut in September and December.
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The trend has sent mortgage rates lower, with the 30-year contract rate down to 6.87 per cent in the week ended July 12 from this year’s peak of 7.29 per cent in April, according to Mortgage Bankers Association figures. However, that’s still twice their level from the end of 2021.
About 65 per cent of the homes sold were on the market for less than a month in June, compared with 67 per cent in May, while 29 per cent sold above the list price. Properties remained on the market for 22 days on average in June, compared with 24 days in May, NAR’s report said.
While record-high prices hardly indicate that this is a buyer’s market, Yun said it’s slowly moving away from being a seller’s market. Fewer buyers are waiving inspections now compared to a year ago, and houses are taking a little longer to sell but generally still moving swiftly, he said.
SEE ALSO
Existing-home sales account for the majority of the US total and are calculated when a contract closes. The government will release June new-home sales figures on Wednesday. BLOOMBERG
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