Implications: Existing home sales continued to struggle in June, marking a disappointing start to the summer selling season.  Looking at the big picture, sales have been stuck around a 4.000 million pace for three years now, about the same pace as in the aftermath of the Great Financial Crisis, and well below the roughly 5.250 million annual pace pre-COVID (let alone the 6.500 million pace during COVID).  The main issue remains affordability which has taken a turn for the worse in the aftermath of the conflict with Iran, with higher energy costs having an upward impact on short-term inflation.  This has taken rate cuts from the Fed off the table and 30-year mortgage rates have moved roughly 50 basis points higher since February, now sitting around 6.6%.  Nonetheless, there is some good news for buyers. Since the COVID pandemic, many existing homeowners have been reluctant to sell due to a “mortgage lock-in” phenomenon, after buying or refinancing at much lower rates before 2022.  This meant that potential buyers had to deal with limited options.  However, the existing home inventory (the number of homes listed for sale) has been improving recently and now sits near the highest level since the pandemic (though still well below pre-COVID levels). The months’ supply of homes (how long it would take to sell existing inventory at the current very slow sales pace) rose to 4.6 in June, approaching the benchmark of 5.0 that the National Association of Realtors uses to denote a normal market.  Finally, though the median price of an existing home hit a record high in today’s report, it is up only 1.8% versus a year ago. This suggests that overall inflation data are likely exaggerating price pressures because of the war in Iran.  Aggregate wage growth (hourly earnings plus hours worked) has been consistently outpacing median home price gains since early-2025, which improves affordability. While many cross currents remain, the fundamentals for a modest improvement in home sales are starting to emerge. In other recent news, initial jobless claims fell 2,000 last week to a still-low 215,000; continuing claims increased 8,000 to 1.814 million.

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