Sales of previously owned homes dropped 5.4% in June compared with May, to 3.89 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors. Sales were also 5.4% lower than June of last year. This is the slowest sales pace since December.

These are closed sales, so based on contracts signed mostly in April and May, when the average rate on the 30-year fixed mortgage jumped above 7%. Rates have pulled back slightly since then, to the high 6% range.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said Lawrence Yun, chief economist for the Realtors. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”

Inventory jumped 23.4% from a year ago to 1.32 million units at the end of June, coming off record lows but still just a 4.1-month supply. A 6-month supply is considered balanced between buyer and seller.

These inventory levels are the highest supply since May 2020, boosted by homes sitting on the market longer. The average time that a home sat on the market was 22 days, up from 18 days a year ago.

Even that new supply, however, is not helping ease prices. The median price of an existing home sold in June was $426,900, an increase of 4.1% year over year and an all-time high for the second straight month. Part of that is skewed because the higher end of the market is much stronger.

Sales of homes priced over $1 million was the only price category seeing gains over last year, while the biggest drop in sales was in the $250,000 and lower range.

Supply of homes for sale is weakest on the lower end, but is seeing a new surge now. While the sales price nationally is high, new listing prices are lower.

“The median listing price is being held down by an influx in smaller and lower-priced listings. In fact, the number of for-sale homes in the $200k to $350k price bucket surged by 50% compared to a year ago,” said Danielle Hale, chief economist for Realtor.com.

Higher-end buyers tend to use more cash, and 28% of sales were all-cash, up from 26% a year ago. Investors pulled back a bit, though, making up 16% of sales, down from 18% one year ago.

“Assuming more inventory continues to increase, two things would happen. Either home sales rise, or, if the prices do not rise, the prices would buckle down,” Yun added.