Although homes continued selling at a record pace, existing home sales dropped in June due to low levels of inventory, according to the latest report from the National Association of Realtors.
Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June. This is down from 5.62 million in May.
Despite this monthly decrease to the second lowest level of 2017, the sales pace is still up 0.7% from last year.
“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” NAR Chief Economist Lawrence Yun said. “The demand for buying a home is as strong as it has been since before the Great Recession.”
“Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines,” Yun said. “The good news is that sales are still running slightly above last year’s pace despite these persistent market challenges.”
Home prices continue to rise, increasing 6.5% from last year’s $247,600 to $263,800 in June 2017. This increase surpassed May as the new peak, and marks the 64th consecutive month of annual gains.
Total housing inventory dropped 0.5% from May and 7.1% from June last year to 1.96 million existing homes available for sale. Inventory has now fallen annually for 25 consecutive months. Unsold housing inventory rests at a 4.3-month supply, down from 4.6 months a year ago.
“It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” Yun said. “Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year.”
Properties stayed on the market for an average 28 days in June, up from May’s 27 days but down from 34 days last year.