Washington D.C., USA: Existing-home sales decreased for the third straight month in June, with declines in the South and West exceeding sales gains in the Northeast and Midwest, data released today by the National Association of Realtors (NAR) show.
The ongoing supply and demand imbalance helped push June’s median sales price to a new all-time high.
Total existing-home sales which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 0.6 percent to a seasonally adjusted annual rate of 5.38 million in June from a downwardly revised 5.41 million in May. With last month’s decline, sales are now 2.2 percent below a year ago.
The seasonally adjusted annual rate of 5.38 million fell short of economists expectations of 5.46 million in June.
Lawrence Yun, NAR chief economist, says closings inched backwards in June and fell on an annual basis for the fourth straight month. “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,” he said. “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 existing-home price for all housing types in June was $276,900, surpassing last month as the new all-time high and up 5.2 percent from June 2017 ($263,300). June’s price increase marks the 76th straight month of year-over-year gains.
Total housing inventory at the end of June climbed 4.3 percent to 1.95 million existing homes available for sale, and is 0.5 percent above a year ago (1.94 million) – the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace (4.2 months a year ago).
Properties typically stayed on the market for 26 days in June, unchanged from the last three months and down from 28 days a year ago. Fifty-eight percent of homes sold in June were on the market for less than a month.
“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” added Yun. “Furthermore, 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.”
Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in June were Midland, Texas; Columbus, Ohio; Boston-Cambridge-Newton, Mass.; Fort Wayne, Ind.; and Boise City, Idaho.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 4.57 percent in June from 4.59 percent in May. The average commitment rate for all of 2017 was 3.99 percent.
“Realtors throughout the country continue to stress that there’s considerable pent-up demand for buying a home among the millennial households in their market,” said Yun. “Unfortunately, they’re just not making meaningful ground, and continue to be held back by too few choices in their price range, and thereby missing out on homeownership and wealth gains.”
First-time buyers were 31 percent of sales in June, which is unchanged from last month and down from 32 percent year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent.
“The modest uptick in new listings last month is perhaps good news for would-be buyers who are still in the market after a highly competitive spring buying season,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “As summer winds down, the number of home shoppers begins to decrease. 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.”
All-cash sales were 22 percent of transactions in June, up from 21 percent in May and 18 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in June, down from 15 percent in May and unchanged from a year ago.
Distressed sales – foreclosures and short sales – were 3 percent of sales in June (lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of June sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales declined 0.6 percent to a seasonally adjusted annual rate of 4.76 million in June from 4.79 million in May, and are 2.3 percent below the 4.87 million sales pace a year ago. The median existing single-family home price was $279,300 in June, up 5.2 percent from June 2017.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 620,000 units in June (unchanged from last month), and are 1.6 percent below a year ago. The median existing condo price was $258,100 in June, which is 4.9 percent above a year ago.
June existing-home sales in the Northeast jumped 5.9 percent to an annual rate of 720,000, but are still 4.0 percent below a year ago. The median price in the Northeast was $305,900, which is up 3.3 percent from June 2017.
In the Midwest, existing-home sales edged up 0.8 percent to an annual rate of 1.27 million in June, but are 3.1 percent below a year ago. The median price in the Midwest was $218,800, up 3.5 percent from a year ago.
Existing-home sales in the South decreased 2.2 percent to an annual rate of 2.25 million in June, but are still 0.4 percent higher than a year ago. The median price in the South was $237,500, up 2.7 percent from a year ago.
Existing-home sales in the West declined 2.6 percent to an annual rate of 1.14 million in June, and are now 5.0 percent below a year ago. The median price in the West was $417,400, up 10.2 percent from June 2017. The National Association of Realtors® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
Why Markets Care About Existing Home Sales Also Called Home Resales
Existing Home Sales report is released monthly, about 20 days after the month ends, by the National Association of Realtors (NAR).
It measures annualized number of residential buildings that were sold during the previous month, excluding new construction. While this is monthly data, it’s reported in an annualized format (monthly figure x12).
The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
Existing Home Sales is a leading indicator of economic health because the sale of a home triggers a wide-reaching ripple effect. For example, renovations are done by the new owners, a mortgage is sold by the financing bank, and brokers are paid to execute the transaction.