Existing Home Sales Fall 4th Straight Month

Existing home sales fell for the fourth straight month to their slowest pace in more than two years, the National Association of Realtors reported yesterday.

NAR said total existing home fell by 0.7 percent to a seasonally adjusted annual rate of 5.34 million in July from 5.38 million in June. With last month’s decline, sales are now 1.5 percent below a year ago and have fallen on an annual basis for five straight months.

The report said single-family home sales fell by 0.2 percent to a seasonally adjusted annual rate of 4.75 million in July from 4.76 million in June and fell by 1.2 percent from a year ago. The median existing single-family home price rose to $272,300 in July, up 4.6 percent from a year ago. Existing condominium and co-op sales fell by 4.8 percent to 590,000 units in July and by 3.3 percent from a year ago. The median existing condo price rose to $248,100 in July, 3.2 percent higher from year ago.

Regionally, only the West saw an increase, rising by 4.4 percent to an annual rate of 1.19 million in July, but fell by 4.0 percent below a year ago. The median price in the West rose to $392,700, up 5.1 percent from a year ago.

In the South, sales decreased by 0.4 percent to an annual rate of 2.24 million in July, and fell by 0.4 percent from a year ago. The median price in the South rose to $233,400, up 2.7 percent from a year ago. Sales in the Northeast fell by 8.3 percent to an annual rate of 660,000, and fell by 1.5 percent from a year ago. The median price in the Northeast rose to $309,700, up by 6.8 percent from a year ago. In the Midwest, sales declined by 1.6 percent to an annual rate of 1.25 million in July, fell by 0.8 percent below a year ago. The median price in the Midwest was $210,500, up by 2.5 percent from a year ago.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said low housing inventories continued to hamper expectations of existing home sales. “Despite overall higher prices, demand appears to be strong and homes continue to sell quickly,” he said. “[But] a disconnect remains between the housing sector and an overall improving economy.”

Vitner noted home sales remain stuck in low gear and affordability is an increasing concern. “Mortgage rates have ticked up over the past year; however, more of an issue are the historically low levels of inventory that have translated to home prices surging well ahead of income growth,” he said. “Price appreciation is especially acute in the West, where inventories are leanest. The divide between the strengthening economy and sluggish housing market is a theme that should persist. While existing home sales should pick up from their current pace, we expect existing home sales to finish 2018 at levels slightly lower than last year.”

Lawrence Yun, NAR chief economist, said too many would-be buyers “are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market.”

NAR reported the median existing home price for all housing types in July rose $269,600, up 4.5 percent from a year ago ($258,100), marking the 77th straight month of year-over-year gains. Total housing inventory at the end of July decreased by 0.5 percent to 1.92 million existing homes available for sale (unchanged from a year ago). Unsold inventory is at a 4.3-month supply at the current sales pace (also unchanged from a year ago).

The report said properties typically stayed on the market for 27 days in July, up from 26 days in June but down from 30 days a year ago. Fifty-five percent of homes sold in July were on the market for less than a month.

NAR said first-time buyers represented 32 percent of sales in July, up from 31 percent last month but down from 33 percent year ago. All-cash sales represented 20 percent of transactions in July, down from 22 percent in June but up from 19 percent a year ago. Individual investors purchased 13 percent of homes in July (unchanged from last month and a year ago).

The report said distressed sales represented 3 percent of sales in July (lowest since NAR began tracking in October 2008), unchanged from last month and down from 5 percent a year ago. Two percent of July sales were foreclosures; 1 percent were short sales.