Existing home sales plummeted to their lowest level this year as an inventory shortage continues to squeeze the U.S. real estate market.
Sales of existing homes slipped 1.3 percent last month to a seasonally adjusted annual rate of 5.4 million, according to a report published Thursday by the National Association of Realtors. That’s still 2.1 percent above where that metric sat a year ago but still represents a low point for 2017 so far.
“Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” Lawrence Yun, the association’s chief economist, said in a statement accompanying the report.
Indeed, Americans were snatching up the limited number of available homes on the market at a breakneck pace last month. The realtors’ association reported 51 percent of homes sold in July had been on the market for less than a month.
“Many households that were reluctant to purchase a few years ago are now looking to get into the market,” Gus Faucher, a senior vice president and chief economist at The PNC Financial Services Group, said in a statement Thursday. “Sales are up about 40 percent from the trough from 2008 to 2010, but have been flat for the past year or so.”
Holding back the housing market in July – and through much of the year – has been a limited supply of reasonably priced options. Inventories declined 1 percent last month and were down 9 percent on the year. For 26 straight months, the number of available housing options has declined on a year-over-year basis.
“Today’s existing home sales data was disappointing, if unsurprising, and the decline in sales in July was compounded by downward revisions to June sales,” Aaron Terrazas, a senior economist at real estate hub Zillow, wrote in a research note Thursday. “The American housing market is stuck in its own kind of stagflation: Existing home sales have been flat since last fall, while home values are up more than 4 percent over the same period.”
To that point, the median sale price of an existing home last month was $258,300 – up 6.2 percent over the year and the 65th straight month of year-over-year gains.
“Home prices are still rising above incomes and way too fast in many markets,” Yun said. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
Thursday’s report trails a similarly underwhelming new home sales release published by the Census Bureau. New home sales fell 9.4 percent in July and were down 8.9 percent on the year. Analysts also attributed that decline to high prices and limited availability.
“This quick pace of selling suggests that buyer demand remains strong and that many house hunters will still have a tough time finding the right place at the right price,” Danielle Hale, a chief economist at realtor.com, said in a statement Wednesday.
Unfortunately for prospective home buyers, more housing options don’t appear to be working their way down the pike. Construction data from July indicated housing starts, permits and completions fell 4.8 percent, 4.1 percent, and 6.2 percent last month, respectively.
“Disappointing results from both new and existing home sales numbers released on the heels of similarly disappointing results for new home starts and building permits could potentially point to a softening in the housing market,” Travis Masters, a portfolio manager at Man GPM Aalto investing group, said in a statement Thursday. “However, builder sentiment is at a multi-month high and the median home price reached a new quarterly peak, pointing to the fundamental supply issue that could keep home prices on a steady growth track.”
Courtesy of usnews.com and credited to Andrew
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