Existing-home sales subsided for the fourth straight month in July to their slowest pace in over two years, according to the National Association of Realtors®. The West was the only major region with an increase in sales last month.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 0.7 percent to a seasonally adjusted annual rate of 5.34 million in July from 5.38 million in June. With last month’s decline, sales are now 1.5 percent below a year ago and have fallen on an annual basis for five straight months.
Lawrence Yun, NAR chief economist, says the continuous solid gains in home prices have now steadily reduced demand. “Led by a notable decrease in closings in the Northeast, existing home sales trailed off again last month, sliding to their slowest pace since February 2016 at 5.21 million,” he said. “Too many would-be buyers are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market.”
The median existing-home price2 for all housing types in July was $269,600, up 4.5 percent from July 2017 ($258,100). July’s price increase marks the 77th straight month of year-over-year gains.
Total housing inventory3 at the end of July decreased 0.5 percent to 1.92 million existing homes available for sale (unchanged from a year ago). Unsold inventory is at a 4.3-month supply at the current sales pace (also unchanged from a year ago).
Properties typically stayed on the market for 27 days in July, up from 26 days in June but down from 30 days a year ago. Fifty-five percent of homes sold in July were on the market for less than a month.
“Listings continue to go under contract in under a month, which highlights the feedback from Realtors® that buyers are swiftly snatching up moderately-priced properties,” said Yun. “Existing supply is still not at a healthy level, and new home construction is not keeping up to meet demand.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.53 percent in July from 4.57 percent in June. The average commitment rate for all of 2017 was 3.99 percent.
“In addition to the steady climb in home prices over the past year, it’s evident that the quick run-up in mortgage rates earlier this spring has had somewhat of a cooling effect on home sales,” said Yun. “This weakening in affordability has put the most pressure on would-be first-time buyers in recent months, who continue to represent only around a third of sales despite a very healthy economy and labor market.”
First-time buyers were 32 percent of sales in July, which is up from 31 percent last month but down from 33 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.
“Despite first-time buyers struggling to achieve homeownership, Realtors® in most areas say demand is still the strongest at the entry-level segment of the market,” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “For prospective first-timers looking to begin their home search this fall, it is expected that competition will remain swift. That is why it’s important to be fully prepared with a pre-approval from a lender, and to begin conversations with a Realtor® early about what you’re looking for and where.”
All-cash sales were 20 percent of transactions in July, down from 22 percent in June but up from 19 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in July (unchanged from last month and a year ago).
Distressed sales5 – foreclosures and short sales – were 3 percent of sales in July (lowest since NAR began tracking in October 2008), unchanged from last month and down from 5 percent a year ago. Two percent of July sales were foreclosures and 1 percent were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales declined 0.2 percent to a seasonally adjusted annual rate of 4.75 million in July from 4.76 million in June, and are 1.2 percent below the 4.81 million sales pace a year ago. The median existing single-family home price was $272,300 in July, up 4.6 percent from July 2017.
Existing condominium and co-op sales fell 4.8 percent to a seasonally adjusted annual rate of 590,000 units in July and are 3.3 percent below a year ago. The median existing condo price was $248,100 in July, which is 3.2 percent above a year ago.
July existing-home sales in the Northeast dropped 8.3 percent to an annual rate of 660,000, and are 1.5 percent below a year ago. The median price in the Northeast was $309,700, which is up 6.8 percent from July 2017.
In the Midwest, existing-home sales declined 1.6 percent to an annual rate of 1.25 million in July, and are 0.8 percent below a year ago. The median price in the Midwest was $210,500, up 2.5 percent from a year ago.
Existing-home sales in the South decreased 0.4 percent to an annual rate of 2.24 million in July, and are 0.4 percent lower than a year ago. The median price in the South was $233,400, up 2.7 percent from a year ago.
Existing-home sales in the West rose 4.4 percent to an annual rate of 1.19 million in July, but are still 4.0 percent below a year ago. The median price in the West was $392,700, up 5.1 percent from July 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.