Even as prices continue to rise, home buyers are finally starting to loosen their grip on their wallets.
Existing home sales saw a modest increase in June, ending a four-month streak of declines, according to the National Association of Realtors’ monthly report.
Sales jumped 1.4 percent over May, to a seasonally adjusted rate of 5.86 million. That’s twice the rate of the previous increase in January, when home sales rose by 0.7 percent. Sales in June were also 22.9 percent higher than they were a year ago.
An increase in housing starts as well as existing homeowners listing their properties have resulted in improved supply, said Lawrence Yun, NAR’s chief economist, though he noted that inventory remains tight enough that “home prices are in no danger of a decline.”
There were 1.25 million homes for sale by the end of June, 3.3 percent more than in May, but still 18.8 percent less than a year ago. It would take 2.6 months to sell the unsold homes at the current sales pace, faster than the 3.9 months it would’ve taken to sell available homes last year.
Home prices rose annually for the 112th consecutive month, with the median home price increasing to $363,300 — a 23.4 percent jump over June of last year and the second-highest year-over-year increase recorded since January 1999.
“I do expect prices to appreciate at a slower pace by the end of the year,” Yun said, adding that home costs would likely increase alongside income growth, which is possible next year with more listings and new construction.
Fewer first-time buyers purchased homes in June than they did last year, making up 31 percent of sales. Individual investors and second-home buyers, on the other hand, purchased 14 percent of homes, up from 9 percent last June.
Wealth gains from housing equity and the stock market are nudging all-cash transactions upwards, but first-time buyers looking for mortgage financing may have a hard time thanks to record-high prices and low inventory, Yun said.
“Although rates are favorably low, these hurdles have been overwhelming for potential buyers,” Yun said.
The Northeast, Midwest and West all experienced small month-over-month gains, while the sales in the South remained flat. All regions saw double-digit year-over-year gains, with the Northeast seeing the largest increase in sales at 45.1 percent.