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July 25th, 2013

Home sales dip, but still ‘enough momentum’ to sustain housing

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Foreclosure for SaleIt was an up and down month in June for the real estate market. While existing-home sales dipped compared with the prior month, the trend line was still upward as sales surpassed their prior-year level. The median price popped for the 16th consecutive month and sales of new homes—counted separately–rose significantly.

Existing-home sales

Completed sales of existing detached houses, townhomes, condominiums and co-ops dipped 1.2 percent in June compared with May, but remains above levels seen in June 2012, according to the National Association of Realtors. The national median price for those homes was $214,200 in June, up 13.5 percent from June 2012.

These numbers are seasonally adjusted, so the normal cyclical rise in springtime home-buying activity is factored in.

In a statement, NAR Chief Economist Lawrence Yun said there was “enough momentum” to sustain the market, despite a mid-month spike in mortgage rates. Houses are still affordable–in terms of price and financing–in most of the country and pent-up demand from buyers is still strong, though higher mortgage rates will “bite into” high-cost regions of California, Hawaii and New York City, Yun said.

Supply broadens some

The supply of for-sale homes rose nearly 2 percent to 2.19 million existing homes on the market at the end of June. That represents a 5.2-month supply at the June pace of sales, up from 5 months’ supply in May. A year earlier, the supply stood at 6.4 months.

“Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth,” Yun said.

Distressed sales

Short sales and foreclosure sales dipped to 15 percent of the total in June, down from 18 percent in May. In June 2012, these so-called distressed sales made up 26 percent of the transactions. Both short sales and foreclosures typically sell at a discount, so their shrinkage as a percentage of the total accounts for some of the increase in the median price, NAR said.

Homes sold in June were on the market a median of 37 days compared with 41 days registered in May and 70 days recorded in June 2012. Short sales took much longer while foreclosures and non-distressed homes sold slight faster than 37 days. Forty-seven percent of all homes sold in June were on the market less than one month, NAR reported.

Who’s buying?

Individual investors buying homes as rental properties accounted for 17 percent of June home sales, down from 18 percent in May and 19 percent in June 2012.

First-time homebuyers typically make up 40 percent of the sales in normal healthy housing markets. In June, they accounted for only 29 percent, up slightly from 28 percent in May and down from 32 percent in June 2012.

New homes

One bright spot was that sales of newly constructed detached houses rose by 8.3 percent in June, according to the U.S. Census Bureau and the Department of Housing and Urban Development. The median sales price of new houses sold in June 2013 was $249,700, and the for-sale supply stood at 3.9 months at the current sales rate.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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