Tight supplies of affordable homes and restrictive mortgage underwriting practices are limiting the options for first-time homebuyers, the National Association of Realtors said in reporting a 5.4 percent drop in existing-home sales from May to June.
NAR estimates that single-family homes, townhomes, condominiums and co-ops sold at a seasonally adjusted annual rate of 4.37 million in June. That’s up 4.5 percent from the same time a year ago — the 12th straight month that sales have seen year-over-year gains.
"Despite the frictions related to obtaining mortgages, buyer interest remains solid," said Lawrence Yun, NAR’s chief economist, in a statement. "But inventory continues to shrink, and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets."
NAR estimated there were 2.39 million existing homes listed for sale at the end of June, a 6.6-month supply at the current sales pace. That’s up slightly from a 6.4-month supply in May, but down from a 9.1-month supply at the same time last year. Many analysts view a six-month supply of housing as an even balance between buyer and seller demand.
First-time buyers accounted for 32 percent of purchasers in June, down from 34 percent in May. Yun said a healthy market share of first-time buyers would be about 40 percent, "so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity."
The national median existing-home price jumped 7.9 percent on an annual basis in June, to $189,400 — the fourth straight month to see year-over-year price increases and the largest year-over-year gain for any month since May 2006, according to NAR.
Distressed homes sold for 18 percent below market value, on average, and accounted for 25 percent of June’s sales.
Yun said he expects the distressed portion of the market to diminish because the number of seriously delinquent mortgages has been falling. All-cash deals accounted for 29 percent of June’s sales — about the same as May unchanged from a year ago.
At a glance: Existing-home sales (May 2012):
|Seasonally adjusted annual rate||4.37 million|
|% change from June 2011||+4.5%|
|% change from May 2012||-5.4%|
|National median price||$189,400|
|% change from May 2011||+7.9%|
|Unsold inventory (months’ supply)||6.6|
|Share of all-cash buyers||29%|
|Share of investor buyers||19%|
|Share of first-time buyers||32%|
|Share of distressed sales||25%|
Source: National Association of Realtors.
All U.S. regions saw existing-home sales dip in June from a year ago with the Northeast leading the way with a 11.5 percent year-over-year drop to 540,000. The median price in the Northeast also dropped in June, down 1.8 percent to $253,700 — the only region in June to see a year-over-year price drop.
In the West, where sales dropped 3.6 percent on an annual basis, median prices jumped 13.3 percent from last June to $233,300, the largest yearly proportional price jump of any region. "Given tight supply in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges," the report noted.
The annual pace of sales slipped in the Midwest and South, while median prices rose on a yearly basis in the regions. Sales in the Midwest, however, are still up 14.6 percent from last June. Sales in the South are up 5.5 percent from last June.