Existing-home sales sagged in July, according to the latest monthly report from the National Association of Realtors (NAR). Why? An unusually low inventory and a lack of momentum in the market, said Lawrence Yun, NAR’s chief economist.
“Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” Yun says in the report. “Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
Transactions involving co-ops, condominiums, single-family homes and townhouses dropped 3.2 percent for the month, translating into an annual rate of 5.39 million sales, down from 5.57 million in June. In July 2015, the annual rate was 5.48 million. The numbers mark the first year-over-year decrease in existing-home sales since November 2015.
On a more-positive note, the existing-home-sales median price for all four housing types rose 5.3 percent to $244,100, compared with $231,800 in July 2015. The numbers mark the 53rd straight month of year-over-year gains.
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The NAR also reports that while inventory inched up 0.9 percent in July, with 2.13 million residential properties for sale, the market remains 5.8-percent lower than it was one year ago when it had 2.26 million residential properties for sale. “Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong Spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new-home construction failing to catch up with underlying demand,” Yun says. “As a result, sales in all regions are now flat or below a year ago, and price growth isn’t slowing to a healthier and sustainable pace.”
Some stats to note from the NAR report:
- First-time homebuyers amounted to 32 percent of those making purchases in July, a decrease from last month (33 percent) and an increase from last year (28 percent).
- Cash sales came in as 21 percent of the total transactions that took place in July, a decrease from both last month (22 percent) and last year (23 percent).
Headquartered in Chicago, the National Association of Realtors represents the “voice of real estate” and the estimated 1.1 million members involved in all aspects of the industry.
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