Existing-Home Sales Fall for First Time Since February -- Update
August 24 2016 - 12:06PM
Dow Jones News
By Eric Morath
WASHINGTON -- Sales of previously owned homes slipped in July, a
sign the U.S. housing-market recovery could be uneven as limited
inventory and rising prices put purchases out of reach for some
Americans.
The pace of existing home sales decreased 3.2% last month from
June to a seasonally adjusted rate of 5.39 million, the National
Association of Realtors said Wednesday. It was the first time sales
had decreased since February.
Economists surveyed by The Wall Street Journal had expected a
July sales pace of 5.52 million. Sales for June were unrevised at
5.57 million, the highest annual rate of the expansion.
From a year earlier, July sales were down 1.6%, but the pace
remains near postrecession highs.
The data suggests rapidly rising prices and limited inventory is
cooling sales.
Demand is greater than supply, said Amherst Pierpont Securities
economist Stephen Stanley, "which means sales are not rising as
much as they are capable of but prices are rising at a faster than
sustainable clip."
Wednesday's report showed it would take 4.7 months to exhaust
the supply of existing homes on the market at the end of July.
Supply has fallen from a year earlier for 14 straight months. Total
housing inventory at the end of July decreased 5.8% from a year ago
to 2.13 million.
The share of first-time buyers was 32% in July, down slightly
from June, NAR said.
News Corp, owner of The Wall Street Journal, also owns Move
Inc., which operates a website and mobile products for the NAR.
The latest figures indicate the housing market could be
challenged to repeat the strong first half of 2016. Historically
low mortgage interest rates, improving income growth and steady job
creation have supported buying of both new and existing homes.
The average rate for a 30-year fixed rate mortgage was 3.48% at
the end of July, down a half-percentage point from a year earlier,
according to Freddie Mac.
So far this year, existing home sales are trending near the pace
recorded just before the recession began. Still, the pace is well
below the peak reached in 2005 when more than 7 million properties
were sold.
The Commerce Department said Tuesday that new homes, just 10% of
the market, sold at the best pace since 2007 in July. But that same
report showed availability of new homes was at a three-year low.
And in some markets, with especially low unemployment, inventory is
even tighter.
If builders are unable to increase supply, prices of existing
homes will rise and that could slow demand because some would-be
buyers will remain in the rental market.
"Home-price growth is outpacing rent growth," said Realtors
economist Lawrence Yun, "which makes it difficult for renters to
convert to buyers."
Rent for primary residences rose 3.8% from a year earlier in
July, according to Labor Department data. Overall consumer prices
were up 0.8%.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
August 24, 2016 11:51 ET (15:51 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.