June Existing Home Sales Down 1.7%

Existing home sales weakened in June, the National Association of Realtors reported yesterday.

NAR said total existing home sales fell by 1.7 percent in June to a seasonally adjusted annual rate of 5.27 million. From a year ago, sales fell by 2.2% (5.39 million). Single-family home sales fell slightly to a seasonally adjusted annual rate of 4.69 million in June, down from 4.76 million in May and down 1.7% from 4.77 million a year ago. The median existing single-family home price rose to $288,900 in June, up 4.5% from June 2018.

Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 580,000 units in June, down 3.3% from the prior month and down 6.5% from a year ago. The median existing condo price rose to $260,100 in June, up by 2.8% from a year ago.

Regionally, sales rose slightly in the Northeast and Midwest but decreased in the South and West regions. Sales in all regions were still lower compared to one year ago, with the most significant declines in the Northeast and West. Median home prices rose in all regions, with the highest gains in the Midwest and South.

Sales in the South fell by 3.4% to an annual rate of 2.25 million in June, down 0.4% from a year ago. The median price in the South rose to $248,600, up 4.9% from one year ago. Sales in the West fell by 3.5% to an annual rate of 1.09 million in June, 5.2% below a year ago. The median price in the West rose to $410,400, up 2.3% from a year ago.

Sales in the Northeast increased by 1.5% to an annual rate of 680,000, a 4.2% decline from a year ago. The median price in the Northeast rose to $321,200, up 4.8% from a year ago. In the Midwest, sales inched up 1.6% to an annual rate of 1.25 million, but fell by 1.6% from a year ago. The median price in the Midwest rose to $230,400, up by 6.7% from a year ago.

“Existing home sales data continue to paint a weaker picture of the housing market than other market data suggests,” said Mortgage Bankers Association Chief Economist Mike Fratantoni. “The job market and consumer spending remain quite strong, but for housing, inventory remains tight–leading to a constrained sales pace, particularly in markets in the West and the South.”

Fratantoni noted the one bright spot in report is the continuing increase in the first-time homebuyer share of the market, now up to 35 percent. “Millennials will be providing much of the incremental housing demand over the next several years, and we expect the first-time buyer share to continue to increase from here,” he said.

“Despite the drop, sales remain fairly solid and lower mortgage rates will likely keep resales on an upward trend for the remainder of the year,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C.

“Home sales are running at a pace similar to 2015 levels–even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country,” said NAR Chief Economist Lawrence Yun. “The nation is in the midst of a housing shortage and much more inventory is needed. Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices,” he said.

Yun addd other factors could be contributing to the low number of sales. “Either a strong pent-up demand will show in the upcoming months, or there is a lack of confidence that is keeping buyers from this major expenditure,” he said “It’s too soon to know how much of a pullback is related to the reduction in the homeowner tax incentive.”

NAR reported the median existing-home price for all housing types in June reached a record high $285,700, up 4.3% from a year ago ($273,800), marking the 88th straight month of year-over-year gains. Total housing inventory at the end of June increased to 1.93 million, up from 1.91 million homes available for sale in May, but unchanged from one year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from the 4.3 month supply recorded in both May and a year ago.

Other report findings:

–Properties typically remained on the market for 27 days in June, up from 26 days in May and a year ago. Fifty-six percent of homes sold in June were on the market for less than a month.

–First-time buyers were responsible for 35% of sales in June, up from 32% the month prior and up from the 31% recorded a year ago.

–As the share of first-time buyers rose, individual investors purchased 10% of homes in June, down from 13% in May and a year ago. All-cash sales accounted for 16% of transactions in June, down from May and a year ago (19% and 22%, respectively).

Distressed sales represented 2% of sales in June, unchanged from May but down from 3% in June 2018. Less than 1% of June 2019 sales were short sales.