Existing home sales decreased for the third consecutive month in June, but the ongoing supply and demand imbalance helped push the median sales price to an all-time high, 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 0.6% to a seasonally adjusted annual rate of 5.38 million in June. This is down from a downwardly revised 5.41 million in May, and sales are now 2.2% below the rate of June 2017, the report showed.
“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,” NAR Chief Economist Lawrence Yun said.
“The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market,” Yun said. “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 reached an all-time high in June, increasing to $276,900 and passing up last June’s $263,000. This is a 5.2% increase from June last year and marks the 76th straight month of year-over-year gains.
Total housing inventory rose 4.3% at the end of June to 1.95 million existing homes available for sale and is 0.5% higher than last year’s 1.94 million. Unsold inventory rests at a 4.3-month supply at the current sales pace, up from 4.2 months last year.
“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,” Yun said. “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.”
Properties stayed on the market an average of 26 days in June, unchanged from the last three months and down from 28 days a year ago. The report states that 58% of homes stayed on the market for less than a month.
The percentage of first-time homebuyers remained unchanged from the previous month at 31% but is still down from 32% from a year ago.
“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,” Yun said. “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.”
Regionally, declines in the South and West exceeded sales gains in the Northeast and Midwest.
Existing home sales in the Northeast climbed 5.9% to an annual rate of 720,000 in June but is 4% below a year ago. The median price in the Northeast rose 3.3% from June 2017 and came in at $305,900.
In the Midwest, existing-home sales rose 0.8% to an annual rate of 1.27 million in June but remains 3.1% below June 2017. The median price in the Midwest was $218,800, increasing 3.5% from this time last year.
Southern existing-home sales decreased 2.2% to an annual rate of 2.25 million in June, however sales are 0.4% higher than a year ago. The median price in the South was $237,500, increasing 2.7% from June 2017.
Existing home sales in the West declined 2.6% to an annual rate of 1.14 million in June and are now 5% below June 2017. The median price in the West was $417,400, increasing 10.2% from June 2017.
“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.”
However, Mendenhall says that although listings are scarce, she expects patience will deliver positive results for those looking to buy in the months ahead.