U.S. existing home sales hit a nine-month low in June due to higher mortgage rates and economic uncertainty, signaling a deepening housing market slowdown. The National Association of Realtors report suggests residential investment could continue to drag on the economy. Sales dropped 2.7% to 3.93 million units, the lowest since September 2024.

The housing market, sensitive to interest rates, accounts for less than 5% of GDP but has a significant economic impact. Concerns are rising that a prolonged decline in the housing market could spill over into the broader economy. Sales declined in several regions, with the West seeing an increase.

The Fed is expected to maintain interest rates at 4.25%-4.50%, impacting mortgage rates. Trump criticized Fed Chair Powell for keeping rates high, affecting buyers’ ability to purchase homes. New home sales are expected to increase in June. The housing market is likely to remain weak due to elevated mortgage rates and economic instability.

Weak buyer demand, especially in the Washington, D.C. metro region, is contributing to the housing market slowdown. The increase in housing supply has slowed house price growth, impacting household wealth and consumer spending. Existing home inventory rose 15.9% year-over-year to 1.53 million units in June.

The national supply of existing homes remains below pre-pandemic levels, but regions like Washington, D.C., Idaho, and Texas have seen a rise in inventory. Reduced labor demand is affecting buyer demand and forcing sales. Median existing home prices hit a record high of $435,300 in June, a 2% increase from last year.

National house prices increased 3.4% year-over-year in June, with some metro areas experiencing declines. Properties spent 27 days on the market in June, up from 22 days last year. First-time buyers accounted for 30% of sales, while all-cash sales constituted 29%. Distressed sales increased slightly to 3%.

Economists predict housing sales to remain stagnant in 2025 before potentially recovering in 2026 with anticipated Fed rate cuts. The housing market’s trajectory is uncertain amid economic challenges and high mortgage rates. Efforts to support the market, including potential tax changes, are being considered.

Read more at Yahoo Finance: US existing home sales hit nine-month low in June