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National Existing Home Sales Fall for Third Month Despite Increasing Inventories

Existing home sales extended their losing streak to three months in June. The National Association of Realtors (NAR) said that single-family homes, townhomes, condominiums, and cooperative apartments sold during the month at an annual rate that was 0.6 percent below that of the previous month and lagged sales in June of last year by 2.2 percent.

Sales were at a seasonally adjusted annual rate of 5.38 million, down from 5.41 million in May. The May figure was a downward revision from the 5.43 million originally reported.

Analysts had expected existing home sales to rise, but only slightly, after two months of losses. The panel polled by Econoday forecasted those sales would fall within an annual range of 5.35 million to 5.52 million. The consensus was for a rate of 5.45 million units.

Single-family home sales were also down 0.6 percent, to a seasonally adjusted annual rate of 4.76 million units from 4.79 million in May. This puts the rate 2.3 percent lower than the 4.87 million pace a year ago. Existing condominium and co-op sales were unchanged from June at a rate of 620,000 units and represent a 1.6 percent loss compared to the previous June.

Lawrence Yun, NAR chief economist, said June was the fourth straight month sales were lower on a year-over-year basis. "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 May as the new all-time high and up 5.2 percent from the June 2017 median of $263,300. It was the 76th straight month in which prices surpassed those a year earlier. The median existing single-family home price was $279,300, up 5.2 percent from June 2017 and the median condo price gained 4.9 percent to $258,100.

The inventory of existing homes did increase in June, climbing 4.3 percent to 1.95 million units. This is 0.5 percent above the level in June 2017 and marks the first time the inventory has grown year-over-year since June 2015. The unsold inventory is estimated to be a 4.3-month supply at the current sales pace, up from 4.2 months the previous June. The increase in inventory did not affect marketing time which was typically 26 days in June, unchanged from the previous three months and two days shorter than in June 2017. 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."

"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 accounted for 31 percent of sales in June, the same share as in May and 1 percentage point lower than a year earlier. Individual investors purchased 13 percent of homes sold during the month, down from 15 percent in May but unchanged from a year ago. Twenty-two percent of sales were all cash and the distressed property share of sales hit an all-time low in NAR records dating back to 2008, 3 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," NAR President Elizabeth Mendenhall said. "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."

Strong sales in the Northeast and a slight uptick in the Midwest were offset by poor performances in the other two regions. The Northeast saw sales jump 5.9 percent to an annual rate of 720,000, although they remain lower year-over-year by 4.0 percent. The median home price was $305,900, a 3.3 percent annual increase.

Existing-home sales edged up 0.8 percent in the Midwest, to an annual rate of 1.27 million units but that region also lags year-earlier numbers, down by 3.1 percent. The median price in the region was up 3.5 percent to $218,800.

Sales in the South declined 2.2 percent to an annual rate of 2.25 million, leaving sales 0.4 percent higher than a year ago. The median price was $237,500, a 2.7 percent annual gain.

The West saw sales drop 2.6 percent to an annual rate of 1.14 million units and are now 5.0 percent below a year ago. Home prices rose 10.2 percent to a median of $417,400.

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