The four-month streak of sales gains through June caps off a solid first half of 2016 for the housing market
After rising in May to their highest pace in almost a decade, existing-home sales in the U.S. maintained their upward trajectory in June and increased for the fourth consecutive month, according to the latest report from the National Association of Realtors (NAR).
NAR says that home sales in June were boosted by a greater share of sales to first-time buyers—the highest in nearly four years. Only the Northeast saw a decline in home sale closings in June.
Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condominiums and co-ops—climbed 1.1 percent to a seasonally adjusted annual rate of 5.57 million in June. After last month's gain, NAR reports that sales are now up 3.0 percent from June 2015 (5.41 million) and remain at their highest annual pace since February 2007.
Lawrence Yun, NAR chief economist, says that the impressive four-month streak of existing-home sales gains through June caps off a solid first half of 2016 for the housing market. "Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances," he said. "Sustained job growth as well as this year's descent in mortgage rates is undoubtedly driving the appetite for home purchases."
"Looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing," Yun cautioned.
The median existing-home price for all housing types in June was $247,700, up 4.8 percent from June 2015 ($236,300). June's price increase marks the 52nd consecutive month of year-over-year gains and surpasses May's peak median sales price of $238,900, according to NAR's report.
Total housing inventory at the end of June dipped 0.9 percent to 2.12 million existing homes available for sale, which NAR says is now 5.8 percent lower than a year ago (2.25 million). Unsold inventory is at a 4.6-month supply at the current sales pace, which is down from 4.7 months in May.
"The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market," Yun added. "The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply — particularly areas in the Midwest and parts of the South."
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased from 3.60 percent in May to 3.57 percent in June. Mortgage rates have now fallen four straight months and in June were the lowest since May 2013 (3.54 percent). The average commitment rate for all of 2015 was 3.85 percent.