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Despite Lack of Inventory, Existing Home Sales Up in June

Snapping four consecutive months of declines, existing-home sales rose 1.4% in June, according to the latest findings from the National Association of Realtors (NAR).

Total existing-home sales—defined as completed transactions that include single-family homes, townhomes, condominiums and co-ops—grew 1.4% from May to a seasonally-adjusted annual rate of 5.86 million in June. Sales climbed year-over-year, up 22.9% from a year ago (4.77 million in June 2020).

"Supply has modestly improved in recent months due to more housing starts, and existing homeowners listing their homes, all of which has resulted in an uptick in sales," said Lawrence Yun, NAR's Chief Economist. "Home sales continue to run at a pace above the rate seen before the pandemic."

Housing supply at the end of June measured 1.25 million units, up 3.3% from May 2021's inventory and down 18.8% from one year ago (1.54 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, modestly up from May's 2.5-month supply, but down from 3.9 months in June 2020. The median existing-home price for all housing types in June was $363,300, up a significant 23.4% from June 2020 ($294,400), as every region recorded price jumps, marking 112 straight months of year-over-year gains.

"At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year," Yun said. "Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022, as more listings and new construction become available."

The trend of a quick sale continued, as properties typically remained on the market for just 17 days in June, unchanged from May, and down from 24 days in June 2020. A whopping 89% of homes sold in June 2021 were on the market for less than a month.

"Huge wealth gains from both housing equity and the stock market have nudged up all-cash transactions, but first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory," Yun said. "Although rates are favorably low, these hurdles have been overwhelming to some potential buyers."

Regionally, existing-home sales in the Northeast increased 2.8% in June, recording an annual rate of 740,000, a 45.1% rise from a year ago. The median price in the Northeast was $412,800, up 23.6% from June 2020. Existing-home sales in the Midwest rose 3.1% to an annual rate of 1,330,000 in June, an 18.8% increase from a year ago. The median price in the Midwest was $278,700, an 18.5% increase from June 2020. In the South, existing-home sales were unchanged from May, posting an annual rate of 2,590,000 in June, up 19.4% from the same time one year ago. The median price in the South was $311,600, a 21.4% climb from one year ago. Existing-home sales in the West rose 1.7%, registering an annual rate of 1,200,000 in June, a 23.7% jump from a year ago. The median price in the West was $507,000, up 17.6% from June 2020.

“Plenty of buyers remain in the market, hoping to find a home that is a good fit for their needs and budget,” noted Realtor.com Chief Economist Danielle Hale. “Despite public opinion that it’s not a great time to buy, many home shoppers are looking to take advantage of still-low mortgage rates and lock in their monthly housing payment, the largest budget item for many households. They are likely also looking to avoid having to contend with sky-rocketing rents. But with home sales prices rising and the typical asking price up by double-digits for 49 straight weeks, this is no easy task. One ray of hope for homebuyers is that the public broadly agrees that it’s a good time to sell, and this is finally translating into a consistent uptick in the number of new home sellers hitting the market. In fact, new listings rose this week for the 14th time in the last 17 weeks.

Click here for more on NAR’s June Existing-Home Sale report.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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