Home prices set a record as sales fall for a second month
It's the end of affordability for first-time home buyers
The U.S. housing market ended its spring selling season on a sour note. Existing home sales fell 2.4 percent in June from May to a seasonally adjusted annual rate of 4.09 million units, well below the 0.7 percent gain economists had expected, The Wall Street Journal reported.
Yet the median price of an existing home sold in June climbed to $440,660, up 1.8 percent from $432,700 a year ago and the highest on record. Prices have now risen for 36 straight months, CBS News reported.
Affordability has effectively collapsed for first-time buyers. Fewer than four in 10 non-homeowner households can afford a typical starter home priced around $200,000, according to LendingTree data cited by CBS. Households now need an annual income of roughly $117,000 to afford the average home, according to Redfin.
Sales below $250,000 continue to shrink, while sales of homes above $1 million rose 18 percent from a year ago, CNBC reported — a widening gap between who can and cannot participate in the market.
Mortgage rates continue their climb
Mortgage rates are not helping. The 30-year fixed climbed to 6.56 percent Thursday, up from 6.51 percent a week ago, according to Wall Street Journal Buyside data. The 5/1 adjustable-rate mortgage moved down to 5.71 percent from 6.28 percent, and the 30-year jumbo edged up to 6.63 percent.
Fannie Mae, which entered the year forecasting rates could fall below 6 percent, now says the 30-year will hold above that level for the rest of 2026. Reuters reported that the average 30-year rate remains about 50 basis points above its pre-Iran-war level, keeping potential buyers on the sidelines and homeowners with sub-5 percent mortgages locked into their existing houses.
