Sales of existing homes and total housing inventory climbed in June as the housing market continued to trek towards a healthier state, the National Association of Realtors reported today.
Existing-home sales rose 2.6 percent from May to June to a seasonally adjusted annual rate of 5.04 million, but remained 2.3 percent below their level from a year ago, the trade group said.
“Inventories are at their highest level in over a year, and price gains have slowed to much more welcoming levels in many parts of the country,” NAR Chief Economist Lawrence Yun said in a statement. “This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”
Housing inventory rose for the sixth straight month in June, hitting its highest level in nearly two years, according to NAR data. Tight inventory has curtailed home purchases by limiting buyers’ options for many months, and its recent growth has helped the housing market buck a slump that lasted through the fall and winter.
The inventory of existing homes was up 2.2 percent from May, to 2.3 million homes. That represented a 5.5-month supply of homes at the pace homes were selling, NAR said.
Compared to a year ago, total inventory was up 6.5 percent, when housing supply would have lasted only five months at last year’s sales pace.
But housing supply still has a ways to go before it reaches a healthy level, Yun said.
Properties sold at a faster pace for the sixth straight month in June. The median time on market for all homes was 44 days in June, down from 47 days in May, but up from 37 days a year ago. Construction of new homes must increase at least 50 percent “for a complete return to a balanced market because supply shortages — particularly in the West — are still putting upward pressure on prices,” Yun said.
Yun added that stagnant wage growth is constraining home sales.
“Hiring has been a bright spot in the economy this year, adding an average of 230,000 jobs each month,” he said. “However, the lack of wage increases is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates.”
“Income growth below price appreciation will hurt affordability,” he said.
Jonathan Smoke, chief economist for realtor.com operator Move Inc., said that job growth, pending home sales and growth in real estate Web traffic all point to a stronger housing market in the second half of 2014.
“I am also expecting gradual improvement in the first-time segment, as younger households represented a greater share of real estate Web traffic in June,” he said.