Existing homes sales weakening in the US amidst housing shortage

Existing home sales in the United States weakened in June, as total sales saw a small decline after a previous month of gains, according to the latest index report from realtors.

While two of the four major regions recorded minor sales jumps, the other two, the South and the West experienced greater declines last month, the data from the National Association of Realtor shows.

Total existing home fell by 1.7% from May to a seasonally adjusted annual rate of 5.27 million in June. Sales as a whole are down 2.2% from a year ago, the figures reveal.

Lawrence Yun, NAR chief economist, pointed out that 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.

He also pointed out that the nation is in the midst of a housing shortage and much more inventory is needed. ‘Imbalance persists for mid to lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices,’ he said.

Yun said other factors could be contributing to the low number of sales. ‘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. It’s too soon to know how much of a pullback is related to the reduction in the homeowner tax incentive,’ he added.

The median existing home price for all housing types in June reached an all-time high of $285,700, up 4.3% from June 2018 when it was $273,800. June’s price increase marks the 88th straight month of year on year gains.

The data also shows that total housing inventory at the end of June increased to 1.93 million, up from 1.91 million existing-homes available for sale in May, but unchanged from the level of one year ago. Unsold inventory is at a 4.4 month supply at the current sales pace, up from the 4.3 month supply recorded in both May and in June 2018.

Properties typically remained on the market for 27 days in June, up from 26 days in May and in June of 2018 and 56% of homes sold in June were on the market for less than a month.

Overall, month on month existing home sales rose slightly in the Northeast and Midwest but decreased in the South and West regions. Sales in all regions were still lower compared to one year ago, with the most significant declines in the Northeast and West. Median home prices rose in all regions, with the highest gains in the Midwest and South.

Existing home sales in the Northeast increased 1.5%, down 4.2% decline from a year ago. The median price in the Northeast was $321,200, up 4.8% from June 2018.

In the Midwest, existing home sales inched up 1.6%, but this is down 1.6% from June 2018. The median price in the Midwest was $230,400, a 6.7% jump up from a year ago.

Existing home sales in the South fell 3.4%, down 0.4% from a year ago. The median price in the South was $248,600, up 4.9% from one year ago.

In the West sales fell 3.5% and are 5.2% below a year ago. The median price in the West was $410,400, up 2.3% from June 2018.

Single family home sales sat at a seasonally adjusted annual rate of 4.69 million in June, down from 4.76 million in May and down 1.7% from 4.77 million a year ago. The median existing single family home price was $288,900 in June, up 4.5% from June 2018.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 580,000 units in June, down 3.3% from the prior month and down 6.5% from a year ago. The median existing condo price was $260,100 in June, which is up 2.8% from a year ago.