Existing Home Sales: Mostly Steady At Low Levels

Bottom Line: Existing home sales fell slightly more than expected in June after 30-year fixed-rate mortgages surged towards 7% in late May. Still, we continue to see signs of stabilization with solid underlying demand despite lower affordability. Inventories of existing home sales remain low, though, with potential sellers having little incentive to leave their homes, particularly if they enjoy mortgage rates that are less than half the prevailing rate today. Prices have started to move sharply higher again in the last few months, likely a result of low inventory. While we don't expect it to continue for a full year, median home prices were up an annualized 17% in the last six months, a sharp contrast to the headline year-on-year numbers that are still down. Overall, housing remains in the process of bottoming, but new home activity will likely rebound much more quickly than existing home activity. And prices have likely bottomed for this cycle.