The National Association of Realtors (NAR) said Monday existing home sales fell in June to a lower-than-expected annualized rate of 5.520 million. However, the 1.8% decline in June from 5.62 million in May is still stronger than the previous year.
“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” Lawrence Yun, the chief economist at NAR said. “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”
The NAR said existing home sales fell in every region except for the Midwest and, though it confirms the Pending Home Sales Index (PHSI), isn’t a terrible report.
“The good news is that sales are still running slightly above last year’s pace despite these persistent market challenges,” Mr. Yun also noted.
First-time buyers represented 32% of sales in June, a 33% decline both in May and from a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%.
“It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun. “Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year.”
Properties lasted 28 days on the market in June, which is up from 27 days in May but down from 34 days a year ago. Short sales remained on the market for the longest period at a median of 102 days in June. Foreclosures sold in 57 days and non-distressed homes were only on the market for 27 days. Fifty-four percent (54%) of homes sold in June were on the market for less than a month.
“Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said Realtor® President William E. Brown, of Alamo, Calif. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.”
The median existing-home price for all housing types in June was $263,800, or 6.5% higher than the $247,600 posted in June 2016. The median sales price in June was higher than May, making it the new high and the 64th straight month of year-over-year gains. That helps to explain the drop in market share for first-time buyers.
Total housing inventory at the end of June fell slightly 0.5% to 1.96 million existing homes available for sale. That’s 7.1% lower than a year ago when it was at 2.11 million. It has now fallen year-over-year for 25 consecutive months.
Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago.
Existing home sales in the Northeast fell 2.6% to an annual rate of 760,000, but are still 1.3% above a year ago. The median price in the Northeast was $296,300, or 4.1% above June 2016.
In the Midwest, existing home sales gained 3.1% to an annual rate of 1.32 million in June, unchanged from June 2016). The median price in the Midwest was $213,000, up 7.7 percent from a year ago.
Existing home sales in the South fell 4.7% to an annual rate of 2.23 million, also unchanged from a year ago. The median price in the South was $231,300, or 6.2% higher than a year ago.
Existing home sales in the West slightly fell 0.8% to an annual rate of 1.21 million in June, but remain 2.5% higher than a year ago. The median price in the West was $378,100, or 7.4% above June 2016.