Sales of existing homes fell for a third straight month in June, and Realtors say there is one overriding reason: there aren't enough homes to meet demand.
Completed sales in June fell 0.6 percent to a seasonally adjusted annual rate of 5.38 million units. Over the last 12 months, sales are down 2.2 percent, according to the latest report from the National Association of Realtors (NAR).
"There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining," said Lawrence Yun, NAR's chief economist. "The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation's housing market.”
It might be easy to look at the declining sales numbers and conclude the housing market is in serious trouble. But Yun says homes coming on the market are going under contract very fast and in many cases, are drawing multiple offers.
Elevated home prices
“This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales," he said.
The problem facing the housing market is one of supply and demand. There are more buyers than sellers, and as a result, the price of available homes is going up much faster than incomes.
That means many people who would like to buy a home, have jobs and stable income, are getting priced out of the market, or can't afford the home of their choice.
The median existing-home price for all houses, including condos and townhomes, was $276,900, surpassing May as the new all-time high. It's up 5.2 percent from June 2017. The year-over-year median prices has now increased for 76 consecutive months.
Modest increase in inventory
There was one bit of good news in the June sales report. Total housing inventory increased 4.3 percent over May and posted the first year-over-year increase since 2015. But Yun said the modest increase isn't nearly enough to help buyers.
"Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up," he said.
The takeaway for prospective homebuyers is to be prepared to move quickly. In June the average home stayed on the market only 26 days before going under contract. Fifty-eight percent of homes sold in June were on the market for less than a month.