Existing home sales--including single-family homes, town homes, condominiums and co-ops-- fell 3.2% in July to a seasonally adjusted annual rate of 5.39 million, according to a National Association of Realtors release Wednesday morning. This is the first decline after existing home sales made steady gains in the past four months.
"Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month," said Laurence Yun, NAR chief economist, in a statement.
Sales of existing single-family homes lost some steam in July to a seasonally adjusted rate of 4.82 million, down -2.0% month-over-month, but are still 0.8% up year-over-year. The slowing resale market in July is at odds with the bright picture in the new home sales side that BUILDER recently reported.
"Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows," Yun commented.
The sudden contraction in single-family sales was largely driven by sales drops in the Northeast and Midwest, where sales were down -12.5%, and -4.7% compared to the previous month, respectively. The West was the lone region that saw sales increase, up 3.8% from the previous month. The South, holding firm from last month, remained the biggest pre-owned single-family market, ending this month with 1.97 million sales.
Inflated home prices resulting from restrained inventories keep hampering potential buyers and weighing down affordability. The median price for a pre-owned single-family home rose 5.4% year-over-year to $246,000 in this month but fell a little compared to June's $249,800. The West continues to be the most expensive region ($349,200), followed by the Northeast ($285,700), South ($219,500), and Midwest ($195,300).
The following is a breakdown of percent change of sales by price range in the existing single-family market.
Total housing inventory at the end of July increased 0.9% to 2.13 million existing homes available for sale, but is still 5.8% lower than a year ago. Unsold inventory is at a 4.7-month supply at the current sales pace, up from the 4.5 months in June.
Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand,” added Yun. “As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace.”
Read the full release on NAR >>