Home sales underwhelmed in June, a fresh sign of how sensitive buyers and sellers are to small changes in mortgage rates and affordability as prices hit fresh all-time highs.

Sales of existing homes dropped 2.4% from May to a seasonally adjusted annual rate of 4.09 million, according to National Association of Realtors data released on Thursday. Economists were expecting a modest increase to 4.2 million.

The monthly fluctuations are likely explained by recent mortgage rate volatility, NAR chief economist Lawrence Yun said. June's buyers likely locked in their rates in April or May, shortly after average 30-year mortgage rates rapidly climbed from around 6% to 6.5% in response to the oil shock and the Iran war.

Compared to last year — when mortgage rates were even higher — sales improved 2.8%. Activity compared to June 2025 increased in all parts of the country except the Northeast, where it was flat.

"Overall, momentum appears to be slightly better compared to a year ago," Yun said.

Read more: How to get the lowest mortgage rates right now

Buyers are finding slightly better affordability conditions this year, as home price appreciation has largely trailed wage growth, mortgage rates remain lower than they were in 2025, and inventory levels have improved.

But affording a home remains a challenge for many. The median existing home sales price reached a new high of $440,600 in June.

"Now, we are in the fourth year of this sales slump," Yun said. "One wonders, 'For how long can home sales remain sort of stuck at this near-4 million range?'"

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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