Elevated mortgage rates and record-high home prices are prompting many buyers to step back from the market. Economists had forecast a modest increase for the month. However, June's sales figure was 2.8% above the level recorded in June of the previous year.
"The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions," said Lawrence Yun, the Realtors' chief economist, in a release. "However, job gains - more than half a million since the beginning of the year - will continue to provide support for the housing market."
The job market added over 500,000 positions in the first half of the year, which helped offset some affordability pressures. Yet the surge in mortgage rates triggered by the Iran conflict in March dampened buyer enthusiasm. Since the data track finalized sales, the corresponding purchase agreements were likely made in May, when the average 30-year fixed mortgage rate continued its upward trajectory. The rate started to increase steeply in early March, coinciding with the onset of the Iran conflict.
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The persistent housing affordability crisis is rooted in a long-term shortage of homes for sale, with inventory remaining well below the six-month supply level that historically indicates a balanced market. While job growth has provided some support, the combination of high borrowing costs and rising prices continues to squeeze potential buyers, particularly first-time homeowners who now represent a larger share of purchases. The luxury segment's strength suggests that higher-end buyers are less sensitive to rate fluctuations, while entry-level demand remains suppressed.
At the close of June, the inventory of unsold homes stood at 1.56 million units, a 0.6% decline from May but a 1.3% increase compared to June 2025.
Because the market remains tight, prices keep moving upward. Typically, June is the peak month for both home sales and pricing.
"Progress on long-term housing affordability could be hampered if inventory growth continues to stall. Without consistent gains in inventory, home prices can accelerate. It is critical to introduce more supply to the market to widen the opportunity for homeownership," Yun said.
The luxury segment continues to see the strongest sales activity. Transactions for homes under $100,000 fell 1.7% year over year, while those in the $100,000-to-$250,000 range saw a gain of under 1%. Meanwhile, annual sales of homes costing $750,000 to $1 million jumped nearly 14%, and those above $1 million surged 18%.
By region, all areas experienced month-over-month declines in June except the Northeast. All-cash purchases accounted for 25% of transactions, falling from 29% a year ago. First-time homebuyers represented 33% of sales, an increase from 30% in the same period last year.
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