By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
Home sales are falling as prices hit record highs.
Economic experts forecasted existing home sales, which make up 90 percent of the U.S. home sales, to rise 0.5 percent in June, but their prediction was wrong.
U.S. home sales unexpectedly fell in June – a third straight month of decline.
The National Association of Realtors reported on Monday that existing home sales slipped 0.6 percent to a seasonally adjusted annual rate of 5.38 million units last month. May’s sale pace was revised to 5.41 million units from the previously reported 5.43 million units.
Sales did rise in the Northeast and Midwest but fell in the West and South. The continual scarcity of properties on the market drove house prices to a record high, sidelining some potential buyers.
Overall, sales are hindered by a serious shortage of homes available for purchase. Rising building materials costs and shortages of land and labor have left many builders unable to bridge the inventory gap which also pushes up house prices.
There is another growing concern. Higher housing prices mixed with rising mortgage rates might also slow down demand. The median house price increased 5.2 percent from a year ago to an all-time high of $276,900. In contrast, annual wage growth has been stuck below 3 percent. Supply is especially tight at the lower end of the market, with sales dropping 18 percent in June from a year ago.
Houses for sale typically stayed on the market for 26 days in June, unchanged from the last three months. Fifty-eight percent of homes sold in June were on the market for less than a month.
In June, 31 percent of home purchases were made by first-time buyers. Economists and realtors say a 40 percent share of first-time buyers is needed for a healthy housing market.
- 27 Jul, 2018
- Josh Smith