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The gains in existing-home sales in May were not repeated for a second month, as June recorded a slight decline in sales. According to the National Association of Realtors (NAR), two regions—the South and the West—were responsible for the drop in sales. While sales climbed in the Northeast and Midwest, all regions posted sales that were lower than the previous year.
Housing Shortage Continues
According to Lawrence Yun, chief economist for NAR, "Home sales are running at a pace similar to 2015 levels—even with exceptionally low mortgage rates, a record number of jobs, and a record high net worth in the country." The sluggish sales pace could be due to a lack of inventory. While the housing shortage saw some relief in June—with inventory increasing from 1.91 million in May to 1.93 million in June—the total housing stock was still unchanged from a year earlier. At the current sales pace, the supply of homes would stock the market for just 4.4 months. In comparison, there was a 4.3-month supply of homes on the market both a month ago and a year ago. The average home sold in just 27 days in June, a day sooner than in May and in June 2018. Of all the homes that sold in June 56% remained available for less than a month.
Rising Prices
The lack of inventory is affecting more than just home sales. According to Yun, "Imbalance persists for mid- to lower-priced homes with solid demand and insufficient supply, which is consequently pushing up home prices." The median existing-home price increased 4.3% from June 2018. This is the 88th month of year-over-year increases.
First-Time Jitters?
However, other factors could be at play when it comes to explaining the drop in home sales. The recent reduction in the homeowner tax incentive might be having an effect on the market. According to Yun, "Either a strong pent-up demand will show in the upcoming months, or there is a lack of confidence that is keeping buyers from this major expenditure." Yet some buyers do not seem put off from making such a major purchase. First-time buyers accounted for 35% of all sales in June. A month ago and a year ago, first-time buyers made up 32% and 31% of the market, respectively.
Regional Breakdown
Northeast - Existing-home sales annual rate of 680,000; an increase of 1.5% from May 2019 but a decrease of 4.2% percent from June 2018. The median home price increased 4.8% year over year to $321,200.
Midwest - Existing-home sales annual rate of 1.25 million; an increase of 1.6% from May 2019 but a decrease of 1.6% from June 2018. The median home price increased 6.7% month over month and year over year to $230,400.
South - Existing-home sales annual rate of 2.25 million; a decrease of 3.4% from May 2019 and a decrease of 0.4% from June 2018. The median home price increased 4.9% month over month and year over year to $248,600.
West - Existing-home sales annual rate of 1.09 million; a decrease of 3.5% from May 2019 and a decrease of 5.2% from June 2018. The median home price increased 2.3% year over year to $410,400.
