A slowdown in sales of previously owned homes shows how lean inventories are keeping prices elevated and limiting purchasing options, National Association of Realtors data showed Monday.
Contract closings fell 1.8% month-to-month to a 5.52 million annual rate (the forecast was 5.57 million). The median sales price rose 6.5% year-to-year to a record $263,800. Inventory of available properties fell 7.1% year-to-year to 1.96 million.
A limited number of properties listed for sale remains the biggest hurdle for the market. Lean inventory is pushing up asking prices at a faster pace than worker pay. While job growth is steady and mortgage rates remain attractive, higher prices are making entry difficult for those looking to make their first purchase.
The data are in line with contract signings for previously owned houses, which unexpectedly fell in May for a third straight month.
New-home sales, which account for about 10% of the residential market, have recently shown more growth, suggesting steady progress in the trade-up market.
"Housing is recovering but it's not a healthy situation," Lawrence Yun, NAR's chief economist, said at a press briefing accompanying the report. "There are affordability challenges. Homes prices have easily outpaced income growth and first-time buyers are struggling to get into the market."
June purchases fell in three of four regions, led by a 4.7% drop in the South to the lowest this year; sales also declined in the West and Northeast. At the current pace, it would take 4.3 months to sell the homes on the market, compared to 4.2 months in May; the Realtors group considers less than a five-month supply as consistent with a tight market.
Single-family home sales decreased 2% last month to an annual rate of 4.88 million, the lowest since February. Purchases of condominium and co-op units were unchanged at a 640,000 pace. First-time buyers made up 32% of all sales in June, compared with 33% the prior month; 40% is "normal" share, Yun said. Homes typically sold in 28 days, compared with 34 days in June 2016, while 54% of homes sold in June were on the market for less than a month.
