Existing home sales declined for the second month in a row in July to its lowest level this year as inventory remains relatively low and prices continue to increase, the National Association of Realtors reported Thursday.
The decline in existing home sales, which account for about 90% of the market, follows a U.S. Census Bureau report Wednesday showing new home sales fell a seasonally adjusted 9.4% from June to July and were down 8.9% from a year earlier.
Existing homes sold at a seasonally adjusted rate of 5.44 million homes a year in July, down from 5.51 million in June and 5.62 million in May as declines in the Northeast and Midwest outweighed sales increases in the South and West. July’s sales pace is still 2.1% above a year ago, but is the lowest of 2017.
“Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” said Lawrence Yun, NAR chief economist.
“Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month,” Yun said.
Existing homes available for sale at the end of July fell 1% to 1.92 million from June and 9% from a year earlier. Total inventory has fallen year-over-year for 26 consecutive months.
Meanwhile home prices continued to rise from year-ago levels for the 65th month in a row. The median price of an existing home was $258,300 in July, up 6.2% from a year ago. The median price of a new home was $313,700 in July, up 6.3% from a year ago.
“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
Despite the weaknesses in the home sales, credit unions have been continuing to gain share of first mortgages. On Wednesday, Credit Union Mutual Group reported that credit unions held $373.8 billion in first mortgages on June 30, up 9% from a year ago, while Callahan & Associates reported first half originations rose 7.4% to $67.5 billion.
