By Tom Kalinski
The national real estate market is headed toward balance with inventory on the rise and existing-home sales increasing in June, reaching an annual pace of 5 million sales for the first time since October 2013, according to the National Association of Realtors®.
Total existing-home sales (completed transactions that include single-family homes, townhomes, condominiums and co-ops) increased 2.6 percent to a seasonally adjusted annual rate of 5.04 million in June from an upwardly revised 4.91 million in May. Sales are at the highest pace since October 2013 (5.13 million), but remain 2.3 percent below the 5.16 million-unit level a year ago, the NAR reports.
Existing-home sales in the West, which includes Colorado, rose 2.7 percent to an annual rate of 1.14 million in June, but remain 7.3 percent below a year ago. The median price in the West was $301,000, which is 7.2 percent higher than the median price in June 2013.
“Inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country,” says Lawrence, Yun, NAR chief economist. “This bodes well for rising home sales in the upcoming months as consumers are provided with more choices. On the contrary, new home construction needs to rise by at least 50 percent for a complete return to a balanced market because supply shortages – particularly in the West – are still putting upward pressure on prices.”
Yun also notes that the lack of wage growth is preventing sales from climbing at a stronger pace.
“Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” he says. “However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates. Income growth below price appreciation will hurt affordability.”
Total housing inventory at the end of June rose 2.2 percent to 2.30 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace, unchanged from May. Unsold inventory is 6.5 percent higher than a year ago, when 2.16 million existing homes were for sale.
The median existing-home price for all housing types in June was $223,300, which is 4.3 percent above June 2013 and marks the 28th consecutive month of year-over-year price gains.
The percent share of first-time buyers continues to underperform historically, rising slightly to 28 percent in June (27 percent in May), but remain at an overall average of 28 percent over the past year.
NAR President Steve Brown, co-owner of Irongate, Inc., Realtors® in Dayton, Ohio, says Realtors® are reporting that some prospective buyers who have above-average credit scores but low down payments are deterred from homeownership by the high cost of FHA mortgage insurance.
“Access to affordable credit continues to hamper young, prospective first-time buyers,” Brown notes.
Single-family home sales rose 2.5 percent to a seasonally adjusted annual rate of 4.43 million in June from 4.32 million in May, but remain 2.9 percent below the 4.56 million pace a year ago. The median existing single-family home price was $224,300 in June, up 4.5 percent from June 2013, the NAR reports
Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in June from 590,000 in May, and are 1.7 percent above the 600,000 unit pace a year ago. The median existing condo price was $215,700 in June, which is 3.2 percent higher than a year ago, according to the NAR.