Existing home sales dip as housing wealth remains at all time high
Affordability challenges continue to rattle buyers, but the latest data suggests conditions may soon start to improve.
Housing affordability is showing signs of improvement lately, but costs still may be the biggest reason many buyers remain hesitant to get into the market. Existing-home sales—which includes single-family homes, townhomes, condos and co-ops—fell 2.4% in June from the previous month, backing off a five-month high reached in May. Still, sales remain nearly 3% higher than a year ago, the National Association of REALTORS® reported Thursday.
While sales fell last month, home prices soared. The median existing-home price hit an all-time high of $440,600 in June, NAR reports. Prices were up about 2% from a year ago, marking three consecutive years of monthly home price increases.
The elevated home prices and mortgage rates may be prompting prospective buyers to rethink their budgets.
“The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions,” says Lawrence Yun, NAR’s chief economist. “However, job gains—more than half a million since the beginning of the year—will continue to provide support for the housing market.”
Even With High Home Prices, Affordability Is Improving
The housing affordability picture may be starting to shift. NAR’s Housing Affordability Index showed improving conditions nationwide, led by an 8.9% annual improvement in the West and an 8.3% gain in the South. The Midwest followed with a 6.2% annual improvement, while the Northeast posted a 4.5% gain.
Housing affordability has been hampered by higher mortgage rates, but that’s getting better, too. The 30-year fixed-rate mortgage averaged 6.49% for June, down from 6.82% a year ago, according to Freddie Mac.
Further, “affordability is better than a year ago because wage growth is outpacing home price growth,” Yun says. That said, “progress on long-term housing affordability could be hampered if inventory growth continues to stall. Without consistent gains in inventory, home prices can accelerate. It is critical to introduce more supply to the market to widen the opportunity for homeownership.”
SOME INTERESTING CHARTS FROM C.A.R.
NAR’s Lawrence Yun: Home sales stuck near 4M for 4th year
The trade group’s chief economist says the housing market hasn’t been this stuck since 2008. Existing-home sales have been stuck in a narrow band for nearly four years. The only other time that happened, foreclosures were flooding the market. This time, however, they aren’t, according to National Association of Realtors Chief Economist Lawrence Yun.
The comparison came as NAR released its June existing-home sales report Thursday, showing sales fell 2.4 percent from May to a seasonally adjusted annual rate of 4.09 million, even as the median price hit a record nationwide of $440,600. Beyond the topline figures, Yun offered a series of observations on a call with reporters that add context to the report.
A slump without a crisis
Existing-home sales have stayed within a range of 3.9 million to 4.2 million for 36 of the past 38 months, Yun said, a stretch he said has happened only once before.