US existing home sales fall; annual house price decline slows
US EXISTING home sales dropped to a five month-low in June, depressed by a chronic shortage of houses on the market that slowed the pace of decline in annual house prices.
Existing home sales fell 3.3 per cent in June to a seasonally adjusted annual rate of 4.16 million units, the lowest level since January, the National Association of Realtors (NAR) said on Thursday (Jul 20). Economists polled by Reuters had forecast home sales would drop to a rate of 4.20 million units.
Sales rose in the Northeast and were unchanged in the Midwest. They fell in the West and the densely populated South.
Home resales, which account for a big chunk of US housing sales, plunged 18.9 per cent on a year-on-year basis in June.
Though data ranging from building permits to homebuilder sentiment suggest the housing market has bottomed out after being pushed into recession by the Federal Reserve’s aggressive interest rate hikes, the persistent shortage of homes for sale could limit any rebound.
With the average rate on the popular 30-year fixed mortgage just under 7 per cent, according to data from mortgage finance agency Freddie Mac, many homeowners are remaining in their homes for longer, contributing to the tight supply.
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Though builders are ramping up production, they are being hampered by shortages of materials like electrical transformer equipment. Higher borrowing costs and land shortages are also constraints.
There were 1.08 million previously owned homes on the market last month, down 13.6 per cent from a year ago. At June’s sales pace, it would take 3.1 months to exhaust the current inventory of existing homes, up from 2.9 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand. The median existing house price fell 0.9 per cent from a year earlier to US$410,200, the second-highest price ever. The median house price rose 3.5 per cent from May.
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“Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month,” said Lawrence Yun, the NAR’s chief economist.
Properties typically remained on the market for 18 days in June, up from 14 days a year ago. Seventy-six per cent of homes sold in June were on the market for less than a month. First-time buyers accounted for 27 per cent of sales, down from 30 per cent a year ago.
All-cash sales accounted for 26 per cent of transactions compared to 25 per cent a year ago. Distressed sales, including foreclosures, represented 2 per cent of transactions, which was unchanged from May. REUTERS
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