Photo: Robert Clark
Lack of inventory was the chief culprit behind the decrease in US existing home sales last month.
The inventory crisis is driving prices up faster than wages are rising in many areas, keeping homeownership out of reach for some buyers, according to a report released today by the National Association of Realtors (NAR).
Total existing home sales, which includes single-family homes, townhouses and condos, fell 1.3 percent to a seasonally adjusted rate of 5.44 million in July. While July’s figure was a little over 2 percent higher than last year, it was the lowest of 2017 — so far.
July’s pace comes off of a downwardly revised 5.51 million home sales the previous month.
Three out of the last four months have recorded a decrease in existing home sales, according to NAR data.
“It’s really not surprising, given that consumer demand is strong, confidence is up, but there’s just not enough product to meet that demand,” Adam DeSanctis, NAR’s Economic Issues Media Manager, tells BuzzBuzzNews.
Nationwide inventory of available existing homes for sale at the end of the July decreased 1 percent to 1.92 million from the previous month, down 9 percent from last year.
Inventory has decreased year-over-year for the last 26 consecutive months, says NAR.
Meanwhile, unsold inventory is at 4.2 months at the current sales pace, below last year’s 4.8 months.
Homes continued to sell in under 30 days for the fourth consecutive month, a trend that NAR is expecting to see carry over into the fall months.
“Building levels aren’t ramping up. Supply will continue to be an issue, and so will competition, especially for first-time buyers looking for affordable housing options,” DeSanctis tells BuzzBuzzNews.
Wage growth continues to lag behind home price appreciation in many markets across the country, further exacerbating the country’s housing affordability problem.
“Supply shortages, multiple-offers, and bidding wars are often driving prices up above asking. But many of our realtors are saying the rate of price growth is not sustainable,” says DeSanctis.
While home prices often rise at a rate of about 3 percent or 4 percent above wage growth, it is increasing at more than double that rate in some hot markets, DeSanctis adds.
And until construction levels increase, these challenges aren’t likely to abate anytime soon.
Click here to read the entire report.