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June home sales slip as affordable homes sell out

by Andrew Morrell

The national existing-home market nearly gave up the ground won in May with a less-than-stellar showing for June sales, according to the National Association of Realtors. Sales of existing homes in June came in 1.7 percent below the previous month’s total, reaching a seasonally adjusted annual pace of 5.27 million. That is also 2.2 percent below year-ago levels.

“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, NAR’s chief economist.

Yun and other economists had long speculated that home sales would regain momentum this spring in response to mortgage rates that remain near three-year lows. However, continued price growth and a shortage of new listings hitting the market have helped keep many buyers away this year despite the advantage of low borrowing costs. The national median sales price for a pre-owned home reached an all-time high of $285,700, 4.3 percent more than the median price in June 2018.

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

In a Redfin report released the same day as NAR’s June sales figures, Redfin’s Dana Olsen found that the lowest third of homes for sale in June according to price were selling for 8.7 percent more compared to 12 months prior. Meanwhile, homes in the top third price tier sold for only 1.1 percent more than in June 2018, indicating strong demand coupled with minimal supply in the most affordable segment of the housing market.

“The fact that prices for the most affordable homes around the country are rising faster than they are for the most expensive homes is one sign of the housing affordability crisis that has taken hold of many parts of the country,” Olsen wrote.

National for-sale inventory levels as of June were unchanged from the prior year, according to NAR, at 1.93 million active listings. The average listing’s time-on-market increased by one day to 27, but NAR noted that more than half of all homes sold in June were on the market for less than one month.

Some regions of the U.S. saw better sales figures than the national average. Closings grew on a monthly basis in the Northeast as well as the Midwest, while sales were down 3.4 percent in the South and 3.5 percent in the West. The Western region was the furthest from last year’s sales pace, with June closings down 5.2 percent year-over-year.

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