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Existing Home Sales Drop 3.2 Percent in July09-06-16 | News

Existing Home Sales Drop 3.2 Percent in July
Lack of Inventory Continues to Plague Industry

Existing home sales fell precipitously in July, compared to June, and the National Association of Realtors said the cause continues to be an inadequate supply of housing.

Existing home sales fell 3.2 percent in July, versus June, mainly because the lack of available homes continues to be a problem in most parts of the country.

The National Association of Realtors said year-over-year sales have dropped (–1.6 percent) for the first time since November 2015. Of the four major U.S. regions the NAR monitors, the West was the only one that increased its July closings.

Existing home sales include single-family houses, townhomes, condominiums and co-ops, fell to 5.39 million units in July from 5.57 units in June.

The disappointing July results come after steady increases the previous four months. "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," said Lawrence Yun, chief economist for the NAR.

"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," Yun added.

First-time buyers comprised 32 percent of all purchases in July, a drop of one percent from June. But it is an improvement over the 28 percent first-time buyer share of a year earlier.

The median price for existing homes in July was $244,100, up 5.3 percent from July 2015 ($231,800). This marks the 53rd consecutive month of year-over-year price gains.

Sales of single-family home sales dropped 2 percent in July, and are now 0.8 percent below the year-over-year pace. Condominium and co-op sales plummeted 12.3 percent for the month, and are now 8.1 percent below July 2015. In a sales breakdown by region: the Northeast dropped 13.2 percent in July, and is down 5.7 percent from a year ago; the Midwest fell 5.2 percent for the month, and remains unchanged from a year ago; the South declined 1.8 percent in July, and is off 1.8 percent from July 2015; the West rose 2.5 percent for the month, but is still 0.8 percent below the pace of a year ago.

While sales have dropped 1.6 percent since July 2015, the number of homes available for sale is down a whopping 5.8 percent, the Wells Fargo Economics Group said. "As a result, homes are selling quickly. The average home stayed on the market for just 36 days, and 47 percent of homes sold in July were on the market for less than one month."

The inventory of existing homes for sale fell 1 percent in July to 1.97 million units, according to Zillow. Inventory has contracted for five of the past six months, and has posted annual declines for the past 14 months. The number of existing homes on the market is lower than it has been at any time since February 2001.