Lawrence Yun reports that record-high home prices and elevated mortgage rates are slowing the national housing market.
Lawrence Yun, chief economist for the National Association of Realtors, stated that the combination of the highest mortgage rates in nearly a year and record-high national median home prices is creating a tepid housing market. Data released Thursday shows that pending home sales in June dropped 5.4% from May and fell 0.3% compared to June of last year. The median sales price for an existing home reached a new record of nearly $441,000. While mortgage rates hovered around 6.5% last month, they remain high enough to discourage many aspiring buyers, particularly first-time homeowners. The housing market is currently experiencing a deep slump, with sales tracking only slightly ahead of last year's multidecade low. Simultaneously, the home building industry faces significant challenges. Robert Dietz, chief economist for the National Association of Home Builders, noted that affordability remains a primary hurdle due to costly land, rising material prices, and labor shortages. To combat these issues, 37% of builders cut prices in July as the industry seeks to expand supply and lower overall costs.