Slowed by frustratingly low inventory levels in many parts of the country, existing-home sales lost momentum in July and decreased year-over-year for the first time since November 2015, according to the National Association of Realtors®.
Total existing-home sales fell 3.2 percent to a seasonally adjusted annual rate of 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months, sales are now below (1.6 percent) a year ago (5.48 million).
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last 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," he said. "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."
Adds Yun, "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."
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage dropped from 3.57 percent in June to 3.44 percent in July. Mortgage rates have now fallen five straight months and in July were the lowest since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.
July existing-home sales in the Northeast descended 13.2 percent to an annual rate of 660,000, and are now 5.7 percent below a year ago. The median price in the Northeast was $284,000, which is 3.3 percent above July 2015.
In the Midwest, existing-home sales fell 5.2 percent to an annual rate of 1.28 million in July (unchanged from a year ago). The median price in the Midwest was $194,000, up 5.0 percent from a year ago.
Existing-home sales in the South in July declined 1.8 percent to an annual rate of 2.22 million, and are now 1.8 percent below July 2015. The median price in the South was $214,500, up 6.6 percent from a year ago.
Existing-home sales in the West rose 2.5 percent to an annual rate of 1.23 million in July, but are still 0.8 percent below a year ago. The median price in the West was $346,100, which is 6.4 percent above July 2015.