Existing-home sales decreased in July for the first time year over year since November 2015. Frustratingly low inventory of affordable homes, coupled with appraisal complications and lagging construction contributed to the slowdown, according to the National Association of RealtorsⓇ’ (NAR) monthly report.
Sales fell in three of the four major regions of the U.S. to reflect a national 3.2% decrease from June. A 2.5% increase in the West was not enough to help the nation continuing its sales climb. Sales are now 1.6% off from July 2015, reflecting only the second decline in 21 months. Existing-home sales in the South declined 1.8% for the month to an annual rate of 2.22 million and are now also 1.8% below July 2015.
NAR’s chief economist, Lawrence Yun, commented on the housing market’s turn in direction:
“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. 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.”
In contrast, home values continue to climb year over year. The U.S. July median existing-home price for all housing types (single-family homes, townhomes, condominiums, and co-ops) was $244,100, a 5.3% increase from July 2015 ($231,800). July now marks the 53rd consecutive month of year-over-year gains. Regionally, the median price in the South was $214,500, up 6.6% from one year ago. Locally, Beverly-Hanks reported in our Q2 Market Report a median home price of $229,500, up 8.4% from $211,640 in Q2 2015.
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|
Region |
Median Home Price
(July 2016) |
Median Price Increase
(July 2015 to July 2016) |
|
U.S. |
$244,100 |
+5.3% |
|
South |
$214,500 |
+6.6% |
|
WNC |
$229,500 (Q2) |
+8.4% (Q2) |
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Total housing inventory inched up 0.9% in July, but remains 5.8% lower than July 2015. This is the 14th month of year over year declines in inventory. Much of this shortage can be attributed to first-time homebuyers, who made up 32% of the share of buyers in July, below last month’s peak of 33%, but still above the 28% share from July 2015. Yun continued:
“Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand. As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace.”
NAR President Tom Salomone said that in addition to affordability concerns, agents are indicating that appraisal complications are more frequently causing delays to contract settlement.
“Appraisal-related contract issues have notably risen over the past year and were the root cause of over a quarter of contract delays in the past three months,” said Salomone. “This is likely a combination of sharply growing home prices in some areas, the uptick in home sales this year and the strong refinance market overworking the already reduced number of practicing appraisers. REALTORS® are carefully monitoring this trend, and some have already indicated they’re extending closing dates on contracts to allow extra time to accommodate the possibility of appraisal-related delays.”
Read more about existing-home sales on NAR. Locally, homes sales are mirroring many of the national trends. View the Beverly-Hanks Quarterly Market Report to see how home sales are growing in your community.
