Home Sales Drop as Prices Rise

Sales of existing single-family homes fell 5.4% in June from the prior month, posting a 14.2% decrease from June 2021 and marking the fifth consecutive month of declining unit sales as prices rose, a prominent industry trade group reported.

The approximately 5.1 million June sales were another sign of a cooling housing market at a time of high inflation and rising interest rates. The National Association of Realtors said Wednesday the sales drop came as the median price for existing homes in the U.S. climbed 13.4% from June 2021 to reach a record high of $416,000.

“Falling housing affordability continues to take a toll on potential homebuyers,” Lawrence Yun, the Chicago-based trade group’s chief economist, said in a statement. “Both mortgage rates and home prices have risen too sharply in a short span of time.”

The trade group also noted that nationwide inventory of unsold homes rose to 1.26 million at the end of June, the equivalent of three months of inventory based on the current monthly sales pace. The number of unsold homes was up 9.6% from May and up 2.4% from June 2021.

Other analysts have noted that single-family home pricing and finance trends affect multifamily demand in many regions by keeping consumers in the rental pool for longer periods of time.

Mortgage Applications Fall to 22-Year Low

Another lingering trend of the high-inflation, rising-interest-rate climate is a drop in mortgage applications to the lowest in more than two decades. They fell 6.3% from the prior week for the period ended July 15, the Mortgage Bankers Association trade group reported Wednesday.

The Washington, D.C.-based group tracks weekly changes in application volume based on lender surveys but does not report specific numbers for applications or dollar volumes. Refinancings dropped 4% from the prior week and were down 80% from the comparable week of 2021.

“Mortgage applications declined for the third week in a row, reaching the lowest level since 2000,” Joel Kan, the trade group’s associate vice president of economic and industry forecasting, said in a statement. “Similarly, with most mortgage rates more than 2 percentage points higher than a year ago, demand for refinances continues to plummet.”

Kan said purchase activity declined for both conventional and government-backed loans, as buyer demand was dampened by factors such as high inflation and persistent affordability challenges.

“The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs,” Kan said.

Weekly Wages Gain

The nation’s full-time workers earned a median weekly wage of $1,041 in the second quarter, up 5.2% from the year-earlier period but still trailing an annual inflation rate that hit a 40-year high of 9.1% in June, the Labor Department reported.

The department said women earned 82.4% as much as their male counterparts, with the median weekly pay at $943 for women and $1,144 for men in the second quarter. Among occupational groups, workers in management, professional and related occupations had the highest median weekly earnings, at $1,743 for men and $1,265 for women, according to data released Tuesday.

Pay is rising as the nation’s unemployment has stayed historically low at 3.6% for the past four months, with layoffs generally limited. Still, the Labor Department reported Wednesday that U.S. job openings dipped slightly in May to approximately 11.3 million, from April’s 11.7 million.

New hires also saw a small decline, to 6.49 million in May from 6.53 million in April, as resignations declined to 4.27 million from 4.33 million. Total separations, including layoffs and voluntary quits, rose slightly to 5.98 million in May from 5.96 million in April.

Employment and inflation are both being closely watched for their potential effects on real estate demand. Several analysts have cautioned that unemployment could rise and contribute to a larger downturn if lingering inflation is not brought under control soon.