In many parts of the country, low inventory is slowing the sale of existing homes, with July’s numbers showing a dramatic decline since one year ago, for the first time since November of 2015. According to the National Association of Realtors, only the West region showed a monthly increase in closing during the month of July.
National Association of Realtors chief economist Lawrence Yun comments that existing homes sales fell slightly in July after steadily they showed steady growth over 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. [NAR] 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.”
Total existing home sales includes not only single-family homes but also townhouses, condominiums, and co-ops. Overall, this number fell 3.2 percent to reach a seasonally adjusted annual rate of 5.39 million in July. This is down from 5.57 million last year, marking only the second time in 21 months.
Yun adds, “Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home.”
Now, the median price for an existing home (for all housing types), in July, was $244,100. That is up 5.3 percent from July of last year ($231,800), which also marks the 53rd straight month of YOY gains.
But total housing inventory at the end of July just eked up nearly one percent higher, reaching 2.13 million existing homes on the market. Even with the bump, though, the numbers are still 5.8 percent lower than it was a year ago (when there were 2.26 million existing homes on the market), showing a decline for the fourteenth straight month.
Finally, Yun goes on to say, “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. 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.”