E Economics

Existing Home Sales Fell Short Of Expectations

22 July, 2021
home sales

As I expected, Existing home sales surprised downward in June. According to the National Association of Realtors (NAR), they rebounded by 1.4% MoM, reaching 5.86M (a bit below the consensus of 5.90M).

1. Elevated home prices have squeezed first-time buyers out of the market

Housing affordability has been under pressure since January with prices rising most in decades. The NAR highlighted that “The median existing-home price for all housing types in June was $363,300, up 23.4% from June 2020 ($294,400), as every region recorded price jumps. This marks 112 straight months of year-over-year gains.

Other reports confirmed that housing prices growth remained strong in June. As an example, “Home value appreciation broke annual records for the second month in a row, growing 15% year-over-year in June – the highest in Zillow data reaching back through 1996.

In this context, Lawrence Yun, NAR’s chief economist noted that first-time buyers who need mortgage financing are being uniquely challenged with record-high home prices and low inventory”… “Although rates are favorably low, these hurdles have been overwhelming to some potential buyers.”

2. Lack of inventory kept weighting on home sales

One of the recent development related to the the housing market has been the collapse in inventory, which pushed prices upward. The NAR underlined “Total housing inventory at the end of June amounted to 1.25 million units, up 3.3% from May’s inventory and down 18.8% from one year ago (1.54 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, modestly up from May’s 2.5-month supply but down from 3.9 months in June 2020.” This pattern was sometimes cited as a dampening factor on transactions.