Existing Home Sales Fall in June
Sales of existing homes fell in June, the first potential sign that the improving housing sector could slow with the rest of the economy.
Existing home sales dipped in June, igniting fears that the rebounding housing market could start chasing the stagnant larger economy into more decline.
The National Association of Realtors (NAR) reported July 19 that sales of previously occupied homes fell to an annual rate of 4.37 million homes (seasonally adjusted) in June, down 5.4 percent from May and setting the lowest pace since last October.
Sales year-over-year are up 4.5 percent, showing an overall improvement that matches recent growth in residential construction, building starts and builder confidence. Fewer homes on the market are also causing prices to rise; median home prices are up 5.0 percent according to the NAR report, to $189,400, and the inventory of unsold homes fell to 2.39 million, a six-and-a-half month supply at the current sales pace. An inventory of less than six months indicates a possible shortage.
Signs of a downturn are making analysts skittish in part because the housing sector is still so far from healthy levels. Economists consider a 6 million unit annual sales pace indicative of a strong market, which would require a 27 percent improvement over June’s reading, a tall order in any economic circumstances. The National Association of Home Builders/Wells Fargo builder sentiment index, a leading indicator of market perceptions, jumped to 35 in June, a five-year high but still below a positive reading of 50 or higher. According to the index, builder confidence has not been that high since April 2006, before the housing market went sour.
Consistently low mortgage rates are also propping the housing market up, though qualifying for a loan has become much more difficult due to the credit crunch brought on by the recession. Many potential homebuyers are wary of even attempting to buy a home in this uncertain market, and will remain so as long as the job market and the overall economy remains weak.