The FINANCIAL -- WASHINGTON (July 23, 2018) — Existing-home sales decreased for the third straight month in June, as declines in the South and West exceeded sales gains in the Northeast and Midwest, according to the National Association of Realtors. The ongoing supply and demand imbalance helped push June’s median sales price to a new all-time high.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 0.6 percent to a seasonally adjusted annual rate of 5.38 million in June from a downwardly revised 5.41 million in May. With last month’s decline, sales are now 2.2 percent below a year ago, according to National Association of Realtors.
Lawrence Yun, NAR chief economist, says closings inched backwards in June and fell on an annual basis for the fourth straight month. “There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” he said. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”
June 2018 Pending Home Sales Snapshot
See and share the May 2018 Housing Snapshot Infographic.
The median existing-home price2 for all housing types in June was $276,900, surpassing last month as the new all-time high and up 5.2 percent from June 2017 ($263,300). June’s price increase marks the 76th straight month of year-over-year gains.
Total housing inventory3 at the end of June climbed 4.3 percent to 1.95 million existing homes available for sale, and is 0.5 percent above a year ago (1.94 million) – the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace (4.2 months a year ago).
Properties typically stayed on the market for 26 days in June, unchanged from the last three months and down from 28 days a year ago. Fifty-eight percent of homes sold in June were on the market for less than a month
“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” added Yun. “Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”
Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in June were Midland, Texas; Columbus, Ohio; Boston-Cambridge-Newton, Mass.; Fort Wayne, Ind.; and Boise City, Idaho.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 4.57 percent in June from 4.59 percent in May. The average commitment rate for all of 2017 was 3.99 percent.
“Realtors throughout the country continue to stress that there’s considerable pent-up demand for buying a home among the millennial households in their market,” said Yun. “Unfortunately, they’re just not making meaningful ground, and continue to be held back by too few choices in their price range, and thereby missing out on homeownership and wealth gains.”
First-time buyers were 31 percent of sales in June, which is unchanged from last month and down from 32 percent year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent.
“The modest uptick in new listings last month is perhaps good news for would-be buyers who are still in the market after a highly competitive spring buying season,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor from Columbia, Missouri and CEO of RE/MAX Boone Realty. “As summer winds down, the number of home shoppers begins to decrease. Listings are still scarce – especially for entry-level homes – but patience may yield a positive result for those looking to buy in the months ahead.”
All-cash sales were 22 percent of transactions in June, up from 21 percent in May and 18 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in June, down from 15 percent in May and unchanged from a year ago, according to National Association of Realtors.
Distressed sales5 – foreclosures and short sales – were 3 percent of sales in June (lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of June sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales declined 0.6 percent to a seasonally adjusted annual rate of 4.76 million in June from 4.79 million in May, and are 2.3 percent below the 4.87 million sales pace a year ago. The median existing single-family home price was $279,300 in June, up 5.2 percent from June 2017.
Existing condominium and co-op sales were at a seasonally adjusted annual rate of 620,000 units in June (unchanged from last month), and are 1.6 percent below a year ago. The median existing condo price was $258,100 in June, which is 4.9 percent above a year ago.
June existing-home sales in the Northeast jumped 5.9 percent to an annual rate of 720,000, but are still 4.0 percent below a year ago. The median price in the Northeast was $305,900, which is up 3.3 percent from June 2017.
In the Midwest, existing-home sales edged up 0.8 percent to an annual rate of 1.27 million in June, but are 3.1 percent below a year ago. The median price in the Midwest was $218,800, up 3.5 percent from a year ago.
Existing-home sales in the South decreased 2.2 percent to an annual rate of 2.25 million in June, but are still 0.4 percent higher than a year ago. The median price in the South was $237,500, up 2.7 percent from a year ago.
Existing-home sales in the West declined 2.6 percent to an annual rate of 1.14 million in June, and are now 5.0 percent below a year ago. The median price in the West was $417,400, up 10.2 percent from June 2017. The National Association of Realtors is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
For local information, please contact the local association of Realtors for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.