According to analysts from Wells Fargo, sales are being restrained by a lack of homes available for sale, particularly at lower price points.
Key Quotes:
“Existing home sales fell 1.8 percent in June, as exceptionally lean inventories kept buyers on the sidelines. The housing market appears to be woefully out of balance. The entrance of investor buyers earlier in the recovery process has taken many lower-price homes off the market, particularly in the Sun Belt, where these investors concentrated their purchases.”
“While sales came in below expectations, June’s decline was not a huge surprise. Pending home sales, which measure signed purchase contracts, have fallen in four out of the past five months, with the only increase coming in February.”
“While demand appears to be flagging, the primary impediment to stronger sales is a lack of supply. Moreover, sales of new homes fell 1.8 percent, June’s 5.52 million unit sales pace remains 0.7 percent above its year ago pace. By contrast, total housing inventory declined 0.5 percent from the prior month and is now 7.1 percent below its year ago level. The 1.96 million homes available for sale at the end of June represent just a 4.3-month supply at the current sales pace, which is down from 4.6 months one year ago.”
“The supply and demand imbalance has led to a prolonged run-up in home prices. The median price of an existing home has risen 6.5 percent over the past year to a record $263,800. The median price of an existing singlefamily home rose 6.6 percent over the past year to a record $266,200. With home prices rising faster than median income, housing affordability has continued to decline, which has further inhibited first-time home buyers.”
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