Sales of existing homes declined for the third-straight month in June, falling to a five-month low and down 2.2% compared to a year ago.
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According to the National Association of Realtors (NAR), existing home sales ran at a 5.38 million seasonally-adjusted annual rate in June, down from May’s 5.41 million rate.
“June’s decrease in existing-home sales continues this year’s trend of coming in below expectations,” according to NAR chief economist Lawrence Yun. “Mortgage rates barely moved in the month of June, which should have given some relief to prospective homebuyers. However, the lack of inventory on the market once again pulled sales downward. Furthermore, home price gains are still outpacing incomes. This ongoing issue will likely lead to more affordability headwinds for those trying to buy a home in the months ahead.”
Market participants believe the slowdown in home sales is a result of lower inventories and higher prices.
The median price of a home sold in June was $276,900, a fresh all-time high, and 5.2% higher than in June 2017.
While total housing inventory rose by 4.3% in June, overall supplies remain tight. According to Yun, “the current level is far from what’s needed to satisfy demand.”
At the current pace of sales, the amount of available homes would be exhausted in 4.3 months. A supply of 6 months is what is generally considered a signal of a balanced, healthy market.
In their July forecast released Monday, Freddie Mac said, “Exceptionally low housing supply and weaker affordability slowed the housing market in the first half of 2018, but total sales activity should still slightly top year-ago levels.”
They said the pace of existing home sales has been disappointing in 2018 as “tight inventory conditions continue to suppress overall activity.”