Existing-home sales have been stuck in a narrow band for nearly four years. The only other time that happened, foreclosures were flooding the market. This time, however, they aren’t, according to National Association of Realtors Chief Economist Lawrence Yun.
The comparison came as NAR released its June existing-home sales report Thursday, showing sales fell 2.4 percent from May to a seasonally adjusted annual rate of 4.09 million, even as the median price hit a record $440,600. Beyond the topline figures, Yun offered a series of observations on a call with reporters that add context to the report.
A slump without a crisis
Existing-home sales have stayed within a range of 3.9 million to 4.2 million for 36 of the past 38 months, Yun said, a stretch he said has happened only once before.
Lawrence Yun
“We are in the fourth year of this 4 million home sales condition,” Yun said. He said the only other time sales remained near 4 million for that long was during the 2008 recession and foreclosure crisis, after which sales stayed below 4 million for four years, then ran above 5 million annually for the following 11 years.
“Unlike 2008, Yun said, the current slump is not driven by distressed properties — foreclosures and short sales accounted for just 2 percent of June transactions, near a historic low. “One wonders how long home sales can remain stuck near 4 million,” he said.
The transaction count may be frozen, but the dollar figures are not, Yun said: Total sales volume in dollar terms has surpassed pre-pandemic levels, even though the number of homes changing hands remains below pre-pandemic levels. He attributed the gap to home prices that are 50 percent higher than before the COVID-19 pandemic.
Record prices, a two-sided story
“Is this good news, like the stock market, or bad news, like grocery prices?” Yun asked of June’s record median price. Record-high prices are “good news for existing homeowners — it is their housing wealth,” he said, “while the news is bad for potential homebuyers, especially renters who want to buy their first home.”
NAR’s Housing Affordability Index improved to 102.3 in June from 95.5 a year earlier, a gain the association attributed to wage growth outpacing home price growth. But Yun said the index is near its lowest level since last summer on a month-to-month basis, since June marks the seasonal peak for home prices — what he called the “bread and butter” month for real estate.
“Without a doubt, affordability is a major challenge for people who want to become homeowners, which is the reason why we need more supply,” Yun said, calling for converting empty commercial buildings into residential units and reducing regulatory burdens on builders.
Where the gains are landing
Yun said price gains are concentrated at the top of the market: Sales of homes priced under $100,000 fell year-over-year, while sales of homes priced above $1 million rose 18 percent. He said the luxury market is giving the median price “a slight upward tilt,” though homes above $1 million still account for less than 10 percent of sales.
Yun also called June’s 1.3 percent year-over-year inventory gain “minuscule,” saying the market needs growth of 30 percent to 40 percent to ease supply constraints.
What Yun is watching behind the numbers
Yun said he has noticed a pattern in NAR’s monthly data: Prior-month figures keep getting revised upward as later transactions are reported. “It’s the economist’s little crooked thing that we monitor,” he said, adding that the pattern suggests late-arriving data tends to come from a stronger market than initial figures capture.
He also addressed why June’s sales decline appears to contradict earlier pending-sales data, which had pointed toward gains. Closings represent “actual economic activity” — mortgages issued, moving trucks loaded — while pending contracts are “just suggestive of what could happen,” since some contracts fall through before closing, Yun said.
Yun pointed to lockbox data, a proxy for how often agents are showing homes to clients, as one of the earliest signals NAR tracks. Lockbox openings in June were unchanged from a year earlier, he said, following several months of gains.
Yun also cited a New Jersey listing, priced just over $1 million, that sold for $500,000 above asking. He called it anecdotal but said it reflects the bidding wars still playing out in supply-constrained Northeast markets, including New Jersey, Connecticut and Massachusetts.
