Existing home sales slide as prices spike
June marks the third month in a row of existing home sales declines, while the median home price reached an all-time high marking its 76th straight month of price increases.
Sales of existing homes slipped 0.6 percent to a seasonally adjusted annual rate of 5.38 million in June. Now, existing home sales are more than 2 percent below where they were last year same time.
“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” said Lawrence Yun, chief economist at NAR. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”
The median price for all housing types in June rose to $276,900, up 5.2 percent from last June. This is the 76th straight month of year-over-year price increases.
Meanwhile, inventory is at a 4.3-month supply at the current sales pace. In a normal market, there would be a six-month supply. Market times fell to just 28 days and 58 percent of homes sold in June were on the market less than a month. This low inventory market leaves most buyers scrambling to make offers and compete with other buyers.
All-cash sales were up slightly, 22 percent, compared to 21 percent in May. In 2017, just 18 percent of buyers used all cash.
Inventory did rise 4.3 percent to 1.95 million houses available for sale in June. That’s a 0.5 percent increase from a year ago, according to the report.
“The current level is far from what’s needed to satisfy demand,” said Yun. “It remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market and new home construction is failing to keep up.”
New construction housing is taking a hit as the impact of tariffs increase the price of Canadian softwood lumber, up more than 22 percent this year. Single-family home starts fell 9 percent in June while multi-family starts dropped nearly 20 percent, according to the Commerce Department.
First time homebuyers measured 31 percent of June sales, same as last month. In 2017, first time homebuyers had a 34 percent market share, according to the NAR 2017 Profile of Home Buyers and Sellers.
“As summer winds down, the number of home shoppers begins to decrease,” said Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, MO and CEO of RE?MAX Boone Realty. “Listings are still scarce, especially for entry-level homes, but patience may yield a positive result for those looking to buy in the months ahead.
Declining sales in the South and West seemed to pull down the national figures. In the South, sales slipped more than 2 percent to an annual rate of 2.25 million while in the West, sales declined nearly 3 percent to an annual rate of 1.14 million. Now, home sales on the west coast are 5 percent below where they were a year ago. Prices, however, are up more than 10 percent.
Sales rose almost 6 percent in the Northeast to an annual rate of 720,000, but that’s still 4 percent below last year’s level. In the Midwest, existing home sales edged up just shy of 1 percent to an annual rate of 1.27 million, yet still more than 3 percent below last year’s level.
Existing home sales include single-family, townhouses, condominiums and co-ops. This data is based on closed sales, not contract signings which can fall through. For that reason, NAR existing-home sales data is deemed most reliable.