June Prices Rise, Existing-Home Sales Decline

Sales of existing homes fell in June with some potential buyers staying on the sidelines, but prices rose modestly as inventories eased, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums, and co-ops — declined 3.8 percent to a seasonally adjusted annual rate of 5.75 million units in June from a downwardly revised level of 5.98 million in May. Existing-home sales are 11.4 percent below the 6.49 million-unit pace in June 2006.

“Two bright spots in the June report are a decline in housing inventory and a modest gain in home prices,” says Lawrence Yun, NAR senior economist. “Although we’ve seen seasonal month-to-month price increases over the past four months, this is the first time in 11 months that the median home price is higher than the year-ago price.”

The national median existing-home price for all housing types was $230,100 in June, up 0.3 percent from June 2006 when the median was $229,300. The median is a typical market price where half of the homes sold for more and half sold for less.

Meanwhile, total housing inventory fell 4.2 percent at the end of June to 4.2 million existing homes available for sale, which represents an 8.8-month supply at the current sales pace, the same as a downwardly revised 8.8-month supply in May.

Consumer Reluctance

Yun says some consumers are uncertain about the current real estate market.

“Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate,” he says. “Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path. Although general buying conditions remain favorable for long-term home buyers, it appears some buyers are looking for more signs of stability before they have enough confidence to make an offer.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.66 percent in June, up from 6.26 percent in May; the rate was 6.68 percent in June 2006.

NAR President Pat V. Combs says that local market conditions vary widely. “Consumers should avoid making decisions based on what they hear about the national market because all real estate is local,” she says. “There are pockets around the country where home sales are quite strong."