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- Home sales just dropped to a 14-year-low as buyers face a shortage of inventory.
- Just 4.16 million units were sold in June, down 19% from June of last year.
- Home prices rose to their second-highest level ever, as the dearth in inventory hurts affordability.
Home sales dropped to a 14-year-low in June, thanks to the shortage in inventory plaguing the housing market.
Existing home sales slumped 3.3% over the past month to a seasonally adjusted 4.16 million homes in June, according to the National Association of Realtors. That's a 19% decline from the 5.13 million home sales reported in June of last year, and it marks the lowest number of homes sold in June since 2009.
The drop in home sales is largely due to the dearth of inventory, as high mortgage rates have discouraged homeowners from listing their properties for sale. The supply of available homes stayed relatively flat in June at 1.08 million units – but that's still 14% lower than the available supply recorded a year ago.
At the current rate of sales, the US has just 3.1 months of unsold housing inventory left on the market, the group estimated.
"There are simply not enough homes for sale," NAR chief economist Lawrence Yun said in a statement on Thursday. "The market can easily absorb a doubling of inventory."
Low inventory has also had the effect of propping up home prices, as demand still outpaces the supply of available homes even as buyers deal with affordability issues stemming from rising mortgage rates. Existing home prices rose to $410,200 in June, just 1% lower than the all-time-high of $413,800 in June of last year.
"Limited supply is still leading to multiple-offer situations, which one-third of homes getting sold above the list price in the latest month," Yun added.
Experts say affordability conditions won't improve until mortgage rates drop, which could unlock more inventory in the market and help home prices ease.
But that's unlikely to happen anytime soon, experts say. The average rate on the 30-year-fixed mortgage will likely measure around 6%-6.5% by year-end, Yun previously told Insider. Meanwhile, experts say rates will need to fall back to around 5% to rev up housing activity.