Existing home sales increase slightly as more listings finally hit the market

After four straight months of declines, used home sales rose 1.4% in June month-over-month to a seasonally adjusted annualized rate of 5.86 million units, according to the National Association of Realtors.

These sales represent closings, so they are based on contracts signed in April and May.

Sales rose 22.9% from June 2020. This annual comparison, according to realtors, is still slightly skewed due to pandemic lockdowns in parts of the country that lasted until the summer of the last year.

The inventory of homes for sale at the end of June was 1.25 million, which represents an offer of 2.6 months at the current pace of sales. This is a slight improvement over the 2.5 month supply in May.

“We may have turned a corner on stocks,” said Lawrence Yun, chief economist at NAR. “There is a certain slowdown in demand.

Low inventories continue to put pressure on prices. The median price of an existing home sold in June hit an all-time high of $ 363,300. This was 23.4% higher than the June 2020 price. Much of that gain, however, is skewed due to the types of homes that are selling. Sales of homes priced between $ 100,000 and $ 250,000 have fallen 16% per year. Sales of homes priced between $ 750,000 and $ 1 million jumped 119%.

“At a general level, house prices are unlikely to decline due to tight inventory conditions, but I expect prices to appreciate at a slower pace by the end of the year. “Yun said. “Ideally, the costs of a home would increase roughly with income growth, which is expected to occur in 2022 as more listings and new construction become available.”

The price gains could start to cool. New registrations were up 9% last week, compared to the same week a year ago, according to Realtor.com. Inventories experienced their 15th consecutive week of gradual declines.

“Although more sellers entered the market last week, home buyers can understandably feel frustrated by the continuing shortage of affordable homes for sale,” Danielle Hale, chief economist at Realtor.com said in a statement. . “The surge in new listings offers a glimmer of hope for buyers who are trying to find a home and lock in still low mortgage rates. With the public overwhelmingly agreeing that now is the time to sell, we may see even more new sellers in the coming weeks and inventory runs out before the end of the year. “

Mortgage rates in April and May, when these contracts were signed, were slightly lower than in March. They have moved within a very narrow range over the months, so they probably wouldn’t have played a role in causing buyers to enter or exit the market.

Buyers are also seeing more competition from investors. They accounted for 14% of all sales, down from just 9% a year ago. In addition, all-cash purchases, which are largely from investors, reached 23% of sales, up from 16% a year ago.