The pace of existing home sales
reached a nine month high in June, topping 5 million units for the first time
since last October while there were reports of continued but moderating home
prices from both the Federal Housing Finance Agency (FHFA) and the National
Association of Realtors® (NAR).
NAR reports that sales of existing
single-family homes, condos, cooperative apartments, and townhomes were at an
annual rate of 5.04 billion, up 2.6 percent from the adjusted May pace of 4.91
million. The previous high in October
2013 was 5.13 million. June sales
however remained below the 5.16 million pace established in June 2013. May sales number were a revision from the
4.89 million originally reported.
Lawrence Yun, NAR chief
economist, said housing fundamentals are moving in the right direction.
“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. This bodes
well for rising home sales in the upcoming months as consumers are provided
with more choices,” he said. “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
Sales of single family homes were at
a rate of 4.43 million in June compared to 4.32 million in May and 4.56 million
one year earlier. These represent
changes of +2.5 percent and -2.9 percent respectively. Existing condominium and co-op sales
increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units compared
to 590,000 the previous month and are 1.7 percent higher than the 600,000 unit
pace in June 2013.
Yun also noted that stagnant wage
growth is holding back what should be a stronger pace of sales. “Hiring has
been a bright spot in the economy this year, adding an average of 230,000 jobs
each month,” he said. “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.”
There was a 2.2 percent gain in the
total housing inventory compared to May with 2.30 million existing homes for
sale at the end of the period, a 5.5 month supply at the current absorption
rate. Unsold inventory is 6.5 percent
higher than a year ago when there were 2.16 million existing homes available
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. Existing single family homes rose
4.5 percent on an annual basis to a median of $224,300 and condos were up 3.2
percent to $215,700.
The share of existing home sales attributed
to the distressed home sector continued to shrink, from 15 percent in June 2013
to 11 percent. Three percent of existing
homes sales were short sales that sold at an average discount from market value
of 11 percent and 8 percent were foreclosures, sold at an average discount of
The share of sales to first-time
buyers continues to underperform historically, rising slightly to 28 percent in
June from 27 percent in May, but remain at an overall average of 28 percent
over the past year. Sixteen percent of
sales were to investors, unchanged from May and one percentage point lower than
a year ago and 69 percent of investors paid cash. All cash sales continue to consistently
represent just slightly less than a third of existing home transactions.
NAR President Steve Brown said
Realtors® are reporting that some prospective buyers who have above
average credit scores but low down payments are discouraged from purchasing by
the high cost of FHA mortgage insurance. “Access to affordable credit continues
to hamper young, prospective first-time buyers,” he said. “NAR
recommends that FHA reduce high annual mortgage insurance premiums for all
qualified homebuyers and eliminate the insurance requirement for the life of
The marketing period in June was 44
days compared to 47 in May and 37 a year earlier. Short sales took a median of 120 days while
foreclosures sold in 54 days and non-distressed homes in 32 days. NAR said the decline in time-on-the-market
over the last six months highlights that inventory is still not keeping pace
with demand. Forty-two percent of homes sold in June were on the market for
less than a month.
Regionally, existing-home sales in
the Northeast rose 3.2 percent to an annual rate of 640,000 in June, but are
3.0 percent below a year ago. The median price in the Northeast was $269,800,
slightly below (0.1 percent) June 2013.
In the Midwest, existing-home sales
jumped 6.2 percent to an annual rate of 1.20 million in June, but remain 2.4
percent below June 2013. The median price in the Midwest was $177,900, up 4.6
percent from a year ago.
Existing-home sales in the South
inched 0.5 percent higher to an annual level of 2.06 million in June, and are
up 1.0 percent from June 2013. The median price in the South was $192,600, up
3.4 percent from a year ago.
Existing-home sales in the West 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 above June 2013.
Also out are the FHFA Home Price Index
(HPI) numbers for May. The index, based
on repeat sales data from the government sponsored enterprises Freddie Mac and
Fannie Mae, was up 0.4 percent compared to April while April’s numbers were
revised upward from “no change” compared to March to an increase of 0.1
On an annual basis the May HPI was up
5.5 percent. The index has now recovered
to within 6.5 percent of its peak in April 2007 and is now at roughly the same
level as in July 2005.
All of the nine census divisions posted
positive annual increases ranging from 2.5 percent in the Middle Atlantic to
9.6 percent in the Pacific division. The
Mountain region increased 8.4 percent over the preceding months and three
divisions had increases of slightly over 5 percent.
Changes from April to May ranged from
-0.7 percent in the East South Central division to 1.1 percent in the West
South Central region.