Existing-home sales drop 1.7%
Tighter inventory, higher prices keep buyers away in June
WASHINGTON — Sales of existing homes tumbled 1.7% in June, with rising prices and a scarce supply locking out many Americans from ownership.
The National Association of Realtors said Tuesday that homes were sold last month at a seasonally adjusted annualized rate of 5.27 million units. Sales have shriveled 2.2% over the past 12 months, despite such positive trends as a robust job market and falling mortgage rates.
But home prices have been climbing faster than incomes for the past seven years. This persistent gap has left many renters unable to afford ownership and prevented existing owners from upgrading to pricier properties. There also has been a supply shortage: Sales listings were flat over the past year at 1.93 million units.
“Sales have struggled to achieve meaningful, consistent growth this year, despite friendly market conditions,” said Matthew Speakman, an economist at the real estate company Zillow. “Meager inventory levels, especially in the entry-level segment, and still-rising prices continue to limit the selection of homes available to more budgetconscious buyers.”
The median sales price climbed 4.3% from a year ago to $285,700, outpacing wage growth that has averaged roughly 3%.
In June, sales fell in the South and West. But increases in homebuying in the Northeast and Midwest were insufficient to offset the decline.
There has been a persistent lack of homes on the market priced below $250,000, a level close to the median national price. But over the past year in the more expensive Northeast and West markets, sales of homes priced at more than $750,000 have fallen — a sign that home values are too high relative to people’s incomes.
There was an increase in the proportion of first-time buyers in June to 35%, up from 32% in May. But homeownership rates for Americans today between the ages of 25 and 34 are lower than preceding generations, according to Census Bureau data.
Homes that are listed are
selling quickly — with a contract being signed in just 27 days.
At the current pace, it would take 4.4 months to sell all the homes on the market, the highest since September and compared with 4.3 months in May; Realtors see anything below five months of supply as a sign of a tight market.
The sales figures are consistent with recent data showing persistent softness in the housing sector after a weak 2018. Housing starts fell for a second month in June with permits at a two-year low, suggesting tight inventory may remain a head wind for buyers. Residential investment hasn’t contributed to gross domestic product growth since 2017, and second-quarter gross domestic product data due Friday will show whether the housing market continued to be a drag on growth.
“Sales refuse to break out higher,” Lawrence Yun, the Realtors association’s chief economist, said at a briefing in Washington. “It doesn’t make economic sense” with job creation, rising wages and the stock market reaching records.
Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. Newhome sales, which make up the remainder, are counted when contracts are signed and will be released today.