Existing home sales down as record prices challenge first timers

by Steve Randall24 Jul 2018


There was a 0.6% decline in existing home sales in June as the South and West regions wiped out gains made in the Northeast and Midwest.

Tight inventory and the corresponding rise in prices meant more pain for first-time buyers who are challenged by lack of choice and financing barriers.

New figures from the National Association of Realtors shows total existing home sales of 5.38 million (seasonally adjusted annual rate). The 0.6% drop from a downwardly-revised 5.28 million in May means that June sales were 2.2% lower than a year earlier.

A record high median price of $276,900 was up 5.2% from June 2017 and marked the 72nd monthly rise in year-over-year gains.

Inventory rises but not nearly enough
There were more homes on the market in June with inventory rising 4.3% to 1.95 million homes.

The annual rise of 0.5% was the first since June 2015 but unsold inventory of 4.3 months is not enough to keep pace with demand.

"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," said NAR chief economist Lawrence 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."

First-time buyers made up 31% of sales in June, which is unchanged from last month and down from 32% year ago.

"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."

Regional breakdown
June existing-home sales in the Northeast jumped 5.9% to an annual rate of 720,000 but were 4.0% below a year ago. The median price in the Northeast was $305,900, which is up 3.3% from June 2017.

In the Midwest, there was a 0.8% rise to an annual rate of 1.27 million but that is 3.1% below a year ago. The median price in the Midwest was $218,800, up 3.5% from a year ago.

Existing-home sales in the South decreased 2.2% to an annual rate of 2.25 million in June and were 0.4% higher than a year ago. The median price in the South was $237,500, up 2.7% from a year ago.

In the West, sales declined 2.6% to an annual rate of 1.14 million, 5.0% below a year ago. The median price in the West was $417,400, up 10.2% from June 2017.




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