U.S. Home Resales Ease as Lean Inventory Drives Prices Higher

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U.S. Existing Home Sales Decline 1.8% in June

A slowdown in sales of previously owned U.S. homes shows how lean inventories are keeping prices elevated and limiting purchasing options, National Association of Realtors data showed Monday.

Highlights of Existing-Home Sales (June)

  • Contract closings fell 1.8% m/m to a 5.52m annual rate (forecast was 5.57 million)
  • Median sales price rose 6.5% y/y to a record $263,800
  • Inventory of available properties fell 7.1% y/y to 1.96m, marking the 25th consecutive year-on-year decline

Key Takeaways

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 U.S. previously owned houses, which unexpectedly fell in May for a third straight month.

New-home sales, which account for about 10 percent of the residential market, have recently shown more growth, suggesting steady progress in the trade-up market.

Economist Views

“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.”

Other Details

  • June purchases fell in three of four regions, led by a 4.7 percent 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; Realtors group considers less than a five months’ supply as consistent with a tight market
  • Single-family home sales decreased 2 percent 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 percent of all sales in June, compared with 33 percent the prior month; 40 percent is ‘normal’ share, NAR’s Yun says
  • Homes typically sold in 28 days, compared with 34 days in June 2016
  • 54 percent of homes sold in June were on market for less than a month

— With assistance by Chris Middleton

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