Sales of previously owned homes decline for third month

Sales of previously owned homes unexpectedly fell in June, indicating a shortage of affordable listings and rising prices continue to limit demand, a National Association of Realtors report showed Monday.

Contract closings fell 0.6% month-over-month to a 5.38 million annual rate (the estimate 5.44 million), a third straight decline, after a revised 5.41 million (previously 5.43 million). The median sales price increased 5.2% year-over-year to a record $276,900. Inventory of available properties rose 0.5% year-over-year to 1.95 million for the first increase since mid-2015.

While inventories rose, affordability remains a constraint for prospective buyers, especially younger Americans or those entering the market for the first time. There is a persistent shortage of available listings to choose from, while property prices are outpacing wages. In addition, borrowing costs have also increased this year.

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Pedestrians walk past a home for sale in San Francisco, California, U.S., on Tuesday, Dec. 29, 2015. Photographer: David Paul Morris/
David Paul Morris/Bloomberg

"This is an indication that possibly the lows in inventory may be coming to an end," Lawrence Yun, NAR's chief economist, said at a press briefing accompanying the report. "We have to wait and see whether this is just a one-month thing."

Purchases rose 5.9% in the Northeast and edged up 0.8% in the Midwest, while those in the South dropped 2.2% and slipped 2.6% in the West. At the current pace, it would take 4.3 months to sell the homes on the market, compared with 4.1 months in May. Single-family home sales declined 0.6% to an annual rate of 4.76 million.

Purchases of condominium and co-op units remained unchanged at 620,000 pace. First-time buyers made up 31% of all sales, unchanged from May and down from 32% a year earlier. Homes were typically on the market for 26 days, down from 28 days a year earlier, as 58% of homes sold in June were on market for less than a month, NAR said. Existing-home sales account for about 90% of the market and are calculated when a contract closes. New-home sales, considered a timelier indicator though their share is only about 10%, are tabulated when contracts get signed.

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