Prop­erty short­age

Home re­sales fall 1.8 per­cent amid ris­ing prices on fewer list­ings.

Northwest Arkansas Democrat-Gazette - - FRONT PAGE - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Pa­tri­cia Laya of Bloomberg News.

JOSH BOAK

WASHINGTON — Home­buy­ers faced surg­ing prices and a shrink­ing num­ber of prop­er­ties for sale in June — caus­ing the pace of sales to fall.

Sales of pre­vi­ously owned homes slipped 1.8 per­cent last month to a sea­son­ally ad­justed an­nual rate of 5.52 mil­lion, the Na­tional As­so­ci­a­tion of Real­tors said Mon­day.

The de­cline re­flects the prob­lems fac­ing a U.S. hous­ing mar­ket ham­pered by a wors­en­ing short­age of prop­er­ties to buy. De­spite solid de­mand in a rel­a­tively healthy econ­omy for houses, sales list­ings have been steadily de­clin­ing for more than two years. The re­sult­ing short­age has caused prices to con­sis­tently rise faster than wage gains, mak­ing it harder for more Amer­i­cans to build up their net worth by be­com­ing home­own­ers.

Sales have im­proved 0.7 per­cent over the past 12 months. The mod­est gains come de­spite solid lev­els of hir­ing that have pushed the un­em­ploy­ment rate to a healthy 4.4 per­cent, a level that in the past would have helped to fuel fur­ther sales growth.

Svenja Gudell, chief econ­o­mist at the real es­tate firm Zil­low, said the lack of sales list­ings may be bor­der­ing on a cri­sis.

“There are about as many homes for sale now as there were in 1994, ex­cept there are about 63 mil­lion more peo­ple in this coun­try now than there were then,” Gudell said.

Many would-be home­buy­ers are un­able to find prop­er­ties to pur­chase.

The num­ber of sales list­ings has been fall­ing on an an­nual ba­sis for the past 25 months. There were 1.96 mil­lion homes for sale in June, a 7.1 per­cent de­cline from a year ago.

“Hous­ing is re­cov­er­ing,

but it’s not a healthy sit­u­a­tion,” Lawrence Yun, the Na­tional As­so­ci­a­tion of Real­tors’ chief econ­o­mist, said at a news brief­ing ac­com­pa­ny­ing the re­port. “There are af­ford­abil­ity chal­lenges. Homes prices have eas­ily out­paced in­come growth, and first-time buy­ers are strug­gling to get into the mar­ket.”

First-time buy­ers made

up 32 per­cent of all sales in June, com­pared with 33 per­cent the pre­vi­ous month; 40 per­cent is the nor­mal share, Yun said.

The short­age of houses on the mar­ket has caused prices to climb at more than dou­ble the pace of av­er­age hourly earn­ings.

The me­dian sales price has risen 6.5 per­cent over the past year to $263,800. Ad­justed for in­fla­tion, the me­dian is about 9 per­cent be­low its 2006 peak dur­ing the hous­ing bub­ble,

when sub­prime mort­gages pushed prices to un­sus­tain­able highs.

David Ber­son, chief econ­o­mist at Na­tion­wide Mu­tual In­sur­ance, said that un­der nor­mal cir­cum­stances, home sales could be ex­pected to rise 8 per­cent to 10 per­cent, but the in­ven­tory short­age is re­duc­ing how many sales can be com­pleted.

Homes sold in June at a me­dian of 28 days, down from 34 days last year.

Sales de­clined last month in the North­east, South and West

but in­creased in the Mid­west.

Mort­gage rates re­main rel­a­tively low by his­tor­i­cal stan­dards, but they’re still higher than a year ago.

The av­er­age 30-year, fixed-rate mort­gage rate was 4.03 per­cent last week, said mort­gage buyer Fred­die Mac, the Fed­eral Home Loan Mort­gage Corp. Last year, home­buy­ers could bor­row at an av­er­age of 3.42 per­cent.

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