With the supply shortage seeing slight progress, June snapped a four-month streak of declining existing-home sales, according to new data from the National Association of Realtors (NAR).
Total existing-home sales reached a seasonally adjusted annual rate of 5.86 million, growing 1.4% month over month and 22.9% year over year. Both single-family and condo sales grew 1.4% monthly. Reversing a troubling trend over the spring, none of the four major U.S. regions saw a sales decline, with sales in the Midwest, Northeast and West rising and sales in the South staying level from May.
“Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” said NAR chief economist Lawrence Yun. “Home sales continue to run at a pace above the rate seen before the pandemic.”
Total housing inventory at the end of June was at 1.25 million units, up 3.3% from May. Inventory has now increased for four consecutive months, though for-sale supply is still down 18.8% from June last year. Homes continue to fly off the market quickly, remaining on the market for an average of 17 days in June, down from 24 months one year ago.
Unsold inventory is at a 2.6-month supply at the current sales pace, up moderately from May’s 2.5-month supply but down from 3.9 months in June 2020. Low numbers of for-sale listings continue to help drive price appreciation, with the median existing-home price in June at $363,300 — a record high and up 23.4% from June 2020. June’s annual increase marked 112 consecutive months of year-over-year price growth.
“[June’s price jump] is an indication that affordability challenges persist for many potential buyers,” said Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association. “Our data on mortgage applications show that purchase activity has moved lower since March, while the average loan size has stayed elevated, consistent with the elevated share of all-cash sales and higher median prices reported by NAR.”
“Huge wealth gains from both housing equity and the stock market have nudged up all-cash transactions, but first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory,” said Yun. “Although rates are favorably low, these hurdles have been overwhelming to some potential buyers.”
He added that while price growth looks to stay torrid in the short-term, some relief may be on the horizon for potential homebuyers later in 2021 and beyond.
“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”