Sales of previously owned homes decline for third month

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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.

"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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