By Sharon Nunn and Sarah Chaney 
 

WASHINGTON-Sales of previously owned U.S. homes declined in June for the third-straight month, suggesting limited inventory and rising prices may be holding back home buying.

Existing-home sales fell 0.6% in June from the previous month to a seasonally adjusted annual rate of 5.38 million, the National Association of Realtors said Monday. Economists surveyed by The Wall Street Journal had expected sales to rise to a 5.45 million annual rate last month.

Compared with a year earlier, sales in June declined 2.2%.

The three-month sales slow-down underscores the growing challenges for the housing market. A shortage of homes on the market at a time when continued job and wage growth are supporting demand have contributed to a rapid run-up in home prices.

Meanwhile, mortgage rates have risen in the last year, increasing the cost of buying a home. The average interest rate on a 30-year fixed-rate mortgage in June was 4.57%, up from 4.03% in January and 3.9% in June 2017, according to Freddie Mac.

The median sale price for an existing home in June was $276,900, up 5.2% from a year earlier. There was a 4.3 month-supply of homes on the market at the end of June, based on the current sales pace, which is up from the 4.2 figure in June of last year.

Meanwhile, there were 1.95 million existing homes available for sale last month, up 0.5% from a year ago. This is the first yearly inventory increase since the middle of 2015, according to Lawrence Yun, the trade group's chief economist.

"Maybe this is indicating that... the lows in inventory may be coming to an end," Mr. Yun said. "We have to see if this is a one-month thing or is establishing a trend for a steady rise in inventory. With inventory possibly increasing, maybe buyers will swing back into the market."

The Trump administration's tax bill that passed in December also reduced some incentives for homeownership, especially in costly coastal markets and high-tax areas, by reducing the cap for the deductibility of mortgage interest and limiting the amount of state and local taxes that can be deducted.

Purchases of previously owned homes account for the bulk of U.S. home-buying activity. The Commerce Department releases data on June new-home sales on Wednesday.

News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.

Write to Sharon Nunn at sharon.nunn@wsj.com and Sarah Chaney at sarah.chaney@wsj.com.

 

(END) Dow Jones Newswires

July 23, 2018 10:15 ET (14:15 GMT)

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