The housing market continues to show high competition among homebuyers, however existing home sales dropped due to low housing inventory.
Total existing-home sales, transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.3% to a seasonally adjusted annual rate of 5.44 million in July, according to the latest report from the National Association of Realtors. This is down from 5.51 million in June, but up 2.1% from last year.
This decrease marks the slowest pace of home sales for 2017, despite interest rates also being at the lowest point of 2017. In fact, the low rate of sales is not due to low demand, but rather, the lack of housing supply.
“Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” NAR Chief Economist Lawrence Yun said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”
But even as the pace of existing-home sales slows, the median existing-home price continues to rise, hitting $258,000 in July. This is up 6.2% from $243,200 in July 2016, marring the 65th straight month of annual gains.
Housing inventory at the end of July fell 1% to 1.92 million existing homes available for sale, now down 9% from last year. Housing inventory has fallen for 26 consecutive months. Unsold inventory now sits at a 4.2-month supply, down from 4.8 months last year.
“Home prices are still rising above incomes and way too fast in many markets,” Yun said. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
Properties stayed on the market an average of 30 days in July, up from 28 days in June but down from 36 days last year.
“July was the fourth consecutive month that the typical listing went under contract in under one month,” Yun said. “This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”