Existing-home sales declined 5.4 percent on a seasonally adjusted annual basis to 4.37 million from an upwardly-revised 4.62 million in May.  Economists surveyed by Reuters expected a gain of +1.1 percent.  According to the National Association of Realtors® (NAR), lower sales of existing homes in June were not the result of lagging demand but rather of an insufficient supply.  

Sales of existing single-family homes declined 5.1 percent to a seasonally adjusted annual rate of 3.90 million from 4.11 million in May, an increase of 4.8 percent from a year earlier when the annual rate was 3.72 million.  Condominium and co-op sales were down 7.8 percent to 470,000 from 510,000 in May but up 2.2 percent from the 460,000 level in June 2011.

On a non-seasonally adjusted basis, sales in June were higher than in May; 462,000 compared to 448,000, and single family home sales were up to 415,000 from 399,000.  One year earlier total and single-family sales were 440,000 and 395,000 respectively.

Lawrence Yun, NAR chief economist, said the bigger story is lower inventory and the recovery in home prices.  "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," he said.  "The price improvement also results from fewer distressed homes in the sales mix."

The national median existing-home price for all housing types was $189,400 in June, up 7.9 percent from a year ago. This is the fourth consecutive month when median prices have been higher than they were at the same point in 2011.   The June increase was the strongest since February 2006 when the median price rose 8.7 percent from a year prior.  The average price was $238,800 compared to $226,000 in June 2011.

The median existing single-family home price was $190,100 an increase of 8.0 percent year-over-year and the median existing condo price was up 6.9 percent on an annual basis to $183,200.

Distressed homes accounted for 25 percent of sales in June with 13 percent of all sales being foreclosures and 12 percent short sales.  These figures were unchanged from May but down from 30 percent in June 2011.  Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent. 

NAR President Moe Veissi noted a steady growth in buyer interest.  "Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly," he said.  "The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices.  Nonetheless, incorrectly priced homes will not attract buyers."

Total housing inventory at the end June fell another 3.2 percent to 2.39 million existing homes available for sale, which represents a 6.6-month supply4 at the current sales pace, up from a 6.4-month supply in May.  Listed inventory is 24.4 percent below a year ago when there was a 9.1-month supply.

First-time buyers accounted for 32 percent of purchasers in June, compared with 34 percent in May and 31 percent in June 2011 which Yun says indicates that a tight inventory in lower prices ranges and unnecessarily tight credit standards are holding back entry level activity. "A healthy market share of first-time buyers would be about 40 percent," he said.

All-cash sales edged up to 29 percent of transactions in June from 28 percent in May; they were 29 percent in June 2011.  Investors, who account for the bulk of cash sales, purchased 19 percent of homes in June, up from 17 percent in May; they were 19 percent in June 2011.

Regionally, existing-home sales in the Northeast dropped 11.5 percent to an annual pace of 540,000 in June but are 1.9 percent above June 2011.  The median price in the Northeast was $253,700, down 1.8 percent from a year ago.

Existing-home sales in the Midwest slipped 1.9 percent in June to a level of 1.02 million but are 14.6 percent higher than a year ago.  The median price in the Midwest was $157,600, up 8.4 percent from June 2011.

In the South, existing-home sales declined 4.4 percent to an annual pace of 1.73 million in June but are 5.5 percent above June 2011.  The median price in the South was $165,000, up 6.6 percent from a year ago.

Existing-home sales in the West fell 6.9 percent to an annual level of 1.08 million in June and are 3.6 percent below a year ago.  The median price in the West was $233,300, up 13.3 percent from May 2011.  Given tight supply in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges.