US Housing Market Hits Record Highs Amid Slowing Sales and Rising Mortgage Rates

Existing home sales in the US declined by 2.4% from May, while median home prices hit a record 440,600 with a 1.8% annual increase, according to National Association of Realtors (NAR). The annualized sales rate stood at 4.09 million, falling short of economists' expectations of 4.21 million. Despite sluggish sales, prices have risen for 36 consecutive months since 1999. Rising mortgage rates, linked to Iran-US conflict and surging oil prices pushing up long-term bond yields, are creating affordability challenges. First-time buyers accounted for 33% of purchases, down from 35% in May and below the historical 40% average.

Mortgage Shockwaves and Sales Decline

■30-year mortgage rates averaged 6.23-6.53% in April-May, the highest since late August.

■30-year high in rates, driven by expectations of inflation amid oil price surges, is pricing out potential buyers.

■First-time buyer share dropped to 33%, well below the historical 40% benchmark.

Price Surge Amid Supply Crunch

■Annual price growth of 1.8% likely reflects contracts signed in April-May, before rate hikes.

■2022 onward housing slump persists with sales stuck at a 30-year low, despite below-average construction levels.

■Lawrence Yun, NAR's chief economist, emphasized the urgent need for increased housing supply to address affordability.

The housing market's dislocation underscores broader macroeconomic tensions. With the Fed's inflation battle intensifying, spillover effects into European markets—particularly Eurozone economies—are likely. Surging oil prices and tighter liquidity could amplify global financing pressures, complicating central banks' policy trajectories.