June Existing Home Sales Fall 0.6 Percent
Existing home sales fell for the third straight month in June, as declines in the South and West more than offset sales gains in the Northeast and Midwest, the National Association of Realtors reported yesterday.
NAR said ongoing supply and demand imbalances helped push June’s median sales price to a record-high $276,000.
The report said total existing home fell by 0.6 percent to a seasonally adjusted annual rate of 5.38 million in June, from a downwardly revised 5.41 million in May. Sales fell by 2.2 percent from a year ago.
Single-family home sales fell by 0.6 percent to a seasonally adjusted annual rate of 4.76 million in June from 4.79 million in May and by 2.3 percent from a year ago (4.87 million). The median existing single-family home price rose $279,300 in June, up 5.2 percent from a year ago. Existing condominium and co-op sales were unchanged at 620,000 units in June and 1.6 percent below a year ago. The median existing condo price rose to $258,100 in June, which is 4.9 percent above a year ago.
Regionally, sales in the South fell by 2.2 percent to an annual rate of 2.25 million in June, but were 0.4 percent higher than a year ago. The median price in the South rose to $237,500, up 2.7 percent from a year ago. Sales in the West dropped by 2.6 percent to 1.14 million in June and by 5.0 percent from a year ago. The median price in the West jumped to $417,400, up 10.2 percent from a year ago.
Sales in the Northeast rose by 5.9 percent to an annual rate of 720,000, but were 4.0 percent below a year ago. The median price in the Northeast rose to $305,900, up 3.3 percent from a year ago. In the Midwest, sales edged up 0.8 percent to 1.27 million in June, but were 3.1 percent below a year ago. The median price in the Midwest rose to $218,800, up 3.5 percent from a year ago.
“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” said NAR Chief Economist Lawrence Yun. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”
NAR said the median existing home price for all housing types in June rose $276,900, surpassing last month’s record high, and rose by 5.2 percent from a year ago ($263,300). June’s price increase marks the 76th straight month of year-over-year gains.
Total housing inventory at the end of June climbed 4.3 percent to 1.95 million existing homes available for sale, 0.5 percent higher than year ago (1.94 million), representing the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace (4.2 months a year ago).
Tim Quinlan, senior economist with Wells Fargo Securities, Charlotte, N.C., noted the months’ supply of existing homes for sale is still low, but the tide may be turning. “That said, there are still shortages of homes for sale, particularly in the South and West where the pace of sales slowed in June, swamping the gains in the Northeast and Midwest,” he said.
“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” Yun said. “Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”
Mark Fleming, chief economist with First American Financial Corp., Santa Ana, Calif., said the market for existing home sales, according to the company’s Potential Home Sales Model, is underperforming its potential by 4.2 percent or an estimated 256,000 units.
Fleming said despite the uptick this month in inventory, “the lack of housing supply is the primary culprit for the persisting gap. The inventory of homes for sale in most markets remains historically tight, yet demand continues to rise as millennials further age into homeownership.”
Fleming said many existing homeowners remain “rate-locked”-they have mortgages with historically low rates and, now that rates are rising, they are hesitant to sell their homes. “If they sell and purchase a new home, they will have a higher mortgage rate. There is limited incentive to sell when, due to higher mortgage rates, it will cost you more each month just to borrow the same amount from the bank. As mortgage rates rise further, more existing homeowners may become rate-locked into their existing homes.”
The report said properties typically stayed on the market for 26 days in June, unchanged from the past three months and down from 28 days a year ago. Fifty-eight percent of homes sold in June were on the market for less than a month.
NAR said first-time buyers represented 31 percent of sales in June, unchanged from May and down from 32 percent year ago. All-cash sales represented 22 percent of transactions in June, up from 21 percent in May and 18 percent a year ago. Individual investors purchased 13 percent of homes in June, down from 15 percent in May and unchanged from a year ago.
The report said distressed sales fell to just 3 percent in June, the lowest since NAR began tracking in October 2008, unchanged from May and down from 4 percent a year ago. Two percent of June sales were foreclosures; 1 percent were short sales.
