Real Estate News

Existing-home sales temper from May to June but show yearly gain

Published: 28 Jul 2017

Between May and June 2017, sales of existing single-family homes, condominiums and townhomes declined 1.8 percent, according to the National Association of Realtors. This decrease manifested as a seasonally adjusted sale rate of 5.52 million units in June, compared to May's 5.62 million units.

While the month-over-month change showed a reduction, the year-over-year figure produced growth. Between June 2017 and the same month a year ago, existing-home sales went up 0.7 percent.

Inventory and prices present challenges
The NAR's chief economist, Lawrence Yun, attributed the monthly dip to issues with inventory and price gains. For instance, the May 2017 CoreLogic home price index went up 6.6 percent year over year and 1.2 percent month over month. Yun commented that these kinds of gains create budgetary constraints for would-be homebuyers.  

"The demand for buying a home is as strong as it has been since before the Great Recession," he said in a press release. "Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines."

However, the news isn't all doom and gloom. This confidence stems from the annual increase in home sales, which could indicate more favorable buying conditions in 2017 compared to 2016.

First-timers feeling the most strain
The NAR report showed the share of first-time homebuyers dropped from 33 percent in May to 32 percent in June. Yun noted many aspiring homeowners have delayed their plans due to low inventory driving price growth.

"It's shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs," the chief economist said.

The good news is this trend, like all other housing market activity, varies regionally. For instance, a WalletHub analysis of 300 cities found McKinney, Texas, is the best city for first-timers overall, with Fayetteville, North Carolina, taking the top spot for affordability.

On the opposite end of the spectrum, California held many of the worst cities to purchase a first home. With the NAR data showing the West had the second-highest median price appreciation year over year and highest median price in June (up 7.4 percent to $378,100), the WalletHub result isn't surprising.

Wherever first-timers shop for a home, they shouldn't lose hope, with NAR President William E. Brown asserting inventory could improve as the summer winds down. With parent buyers abandoning their searches or finding homes as school starts, competition could temper.