Home/Mortgages/Tight Housing Supply Sends Home Sales Tumbling

July 23, 2012 (Chris Moore)

Completed transactions of existing home purchases tumbled in June according to the National Association of Realtors® (NAR), the second consecutive month that existing home sales have shown signs of weakening though the Association attributes the downturn in transactions to tight supplies of affordable housing.

Monthly existing home sales, which include single-family homes, townhomes, condos, and co-ops, fell to a seasonally adjusted rate of 4.37 million in June, down from 4.62 million in May, a loss of 5.4 percent. Compared to June of last year, sales were still 4.5 percent higher than the 4.18 million seasonally adjusted transactions. It was the 12th consecutive month that year-over-year home sales have increased.

May’s completed transactions were revised upward from a seasonally adjusted rate of 4.55 million transactions to 4.62 million transactions, leaving sales for the month unchanged from April instead of the previously reported 1.5 percent decline.

Lawrence Yun, chief economist of NAR, stated, “Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets. The price improvement also results from fewer distressed homes in the sales mix.”

Regional Home Sales:

Monthly existing home sales in the Northeast declined by 11.5 percent to an annual rate of 540,000 transactions but were 1.9 percent higher than in June of last year, while in the Midwest, sales fell 1.9 percent from the previous month, selling at a rate of 1.02 million annual sales, but were 14.6 percent higher than last year’s sales pace.

In the South, monthly existing home sales declined 4.4 percent in June at an annual pace of 1.73 million transactions but were 5.5 percent above June 2011’s levels, and in the West, transactions for the month fell by 6.9 percent to an annual rate of 1.08 million sales and were 3.6 percent lower than last year’s sales pace.

Home Prices:

Monthly home prices increased 3.7 percent as the national median existing home price increased from $182,600 in May to $189,400 in June. The median home price in June was 7.9 percent higher than in the same month last year, the fourth consecutive month that home prices have surpassed the previous year’s levels.

The median price in the Northeast was $253,700, which was 1.8 percent higher than a year ago and up from $250,700last month, while the median price in the Midwest was $157,600, up 8.4 percent from June of 2011 and up from $147,700last month.

In the South, the median price was $165,000, a gain of 6.6 percent from a year ago and up from $159,700 last month, and in the West, the median price was $233,300, up 13.3 percent from June of 2011 but down slightly from $233,900 the previous month.

Cash and Distressed Property Sales:

Distressed property sales accounted for 25 percent of all existing home sales in June, unchanged from in May and down from 30 percent in June of 2011. Foreclosure sales made up 13 percent of all existing home sales while short sales accounted for 12 percent of all existing sales.

Cash sales accounted for 29 percent of all sales in June, up from 28 percent in May, while investors jumped in and purchased 19 percent of the homes sold in June, up from 17 percent in May.

Housing Inventory:

The number of homes available for sale in June edged down 3.2 percent to 2.39 million homes which represents a 6.4 month supply, down from a 6.5 months supply in May.

Tags: existing home sales, investors, distressed property sales, declining prices, low appraisals, cancelled contracts, median home price