Existing home sales fall 1.7 percent in June

The pace of existing home sales fell back in June despite some favorable homebuying conditions, according to the latest monthly report from the National Association of Realtors.

The seasonally adjusted annual rate of existing home sales in the United States stood at 5.27 million during the month. This was down 1.7 percent from May and a year-over-year decline of 2.2 percent, the 16th straight month where the sales pace has decreased from the previous year.

"Home sales are running at a pace similar to 2015 levels – even with exceptionally low mortgage rates, a record number of jobs, and a record high net worth in the country," said Lawrence Yun, chief economist at the National Association of Realtors.

According to Freddie Mac, the average mortgage rate for a 30-year fixed rate loan was 3.8 percent in June. This was down from 4.07 percent in May and the 2018 average of 4.54 percent.

"Historically, these rates are incredibly attractive," said John Smaby, president of the National Association of Realtors. "Securing and locking in on a mortgage now—given the current, favorable conditions—is a decision that will pay off for years to come."

However, Yun said buyers are facing more pressure due to a lack of affordable homes. The inventory of available existing homes for sale in June stood at 1.93 million, up from 1.91 million in the previous month but unchanged from the previous year.

"Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices," said Yun.

The median price for an existing home has grown annually for 88 straight months. In June, a median home sold for $285,700 – up 4.3 percent from June 2018.

Single-family home sales had an annual rate of 4.69 million, dropping 1.5 percent from May and 1.7 percent from June 2018. The median price for this type of property increased 4.5 percent from the previous year to $288,900.

Condominium and co-op sales had an annual rate of 580,000 units, down 3.3 percent from the previous month and 6.5 percent from the previous year. The median price for this type of property increased 2.8 percent from June 2018 to $260,100.

Despite these challenges, first-time buyers made up a stronger share of home purchases. Thirty-five percent of the month's existing home sales went to buyers purchasing their first residence, up from 32 percent in May and 31 percent in June 2018.

The typical property sold in June had been on the market for 27 days, one day slower than both May and June 2018. Fifty-six percent of existing homes sold during the month were listed for less than a month before finding a buyer.

Ten percent of June's existing home sales went to individual investors, down from 13 percent in both the previous month and previous year. All-cash transactions, typically undertaken by investors, accounted for 16 percent of the month's sales – down from 19 percent in May and 22 percent in June 2018.

Two percent of existing home sales were distressed properties, the same share as in May but down from 3 percent in June 2018. Short sales accounted for less than 1 percent of transactions.

Yun said it is unclear whether more buyers will take advantage of favorable rates in the near future or if they will be more reluctant to purchase a home due to higher prices.

"Either strong pent-up demand will show in the upcoming months, or there is a lack of confidence that is keeping buyers from this major expenditure," said Yun. "It's too soon to know how much of a pullback is related to the reduction in the homeowner tax incentive."

In the Northeast, the annual rate of existing home sales rose 1.5 percent from the previous month to 680,000; this was still down 4.2 percent from the previous year. The median home price for a property in this region was $321,200, a year-over-year increase of 4.8 percent.

The Midwest had the strongest monthly growth, with its annual sales rate standing at 1.25 million – up 1.6 percent from May, but down 1.6 percent from June 2018. The median price for a home sold in the region increased 6.7 percent from the previous year to $230,400.

The most pronounced dip in sales occurred in the West, where the annual sales rate fell 3.5 percent from the previous month and 5.2 percent from the previous year to 1.09 million. The median price for a home in this region rose 2.3 percent to $410,400.

The annual rate of 2.25 million home sales in the South represented a 3.4 percent decrease from May and a 0.4 percent decrease from June 2018. The median home price increased 4.9 percent from the previous year to $410,400.

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