US DATA: Existing Home Sales Weaken With Affordability Still A Concern

Existing home sales unexpectedly fell in June, coming in at 4.09M (seasonally-adjusted annualized rate) vs 4.20M consensus/4.19M prior rev from 4.17M. The 2.4% pullback was the first drop in 3 months and drags sales closer to the 4M level that has prevailed for most of the last 2 years after May's was the 2nd highest since mid-2023.

• Inventories fell 0.6% but the poor sales nudged up the months-of-supply metric to 4.6 from 4.5 for a fresh 10-month high though, suggesting a little more slack in the market; prices were still up 1.8% on a Y/Y NSA basis.
• Sales in the Midwest (-3.0%), West (-1.3%) and South (-3.6%) fell, with the Northeast seeing a 2.1% pickup to a 4-month high.
• May's  pending home sales showed a strong increase and those tend to lead existing sales by a month or two, so this should be a temporary dip, but the overall picture is that existing sales remain soft by longer-run standards (about 25% below 2019 levels and at levels that are around those seen in the financial/housing crisis in 2008). The pickup in mortgage rates in July so far and renewed weakness in mortgage applications do not bode well for a near-term recovery either.
• Per NAR Chief Economist Lawrence Yun in the release: “The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions...However, job gains—more than half a million since the beginning of the year—will continue to provide support for the housing market.”