After four straight months of declines, sales of previously owned homes rose 1.4% in June month-to-month to a seasonally adjust annualized rate of 5.86 million units, according to the National Association of Realtors.
These sales represent closings, so they are based on contracts signed in April and May.
Sales were 22.9% higher compared with June 2020. That annual comparison, according to the Realtors, is still slightly skewed due to pandemic lockdowns in certain parts of the country that lasted into summer last year.
The inventory of homes for sale at the end of June was 1.25 million, representing a 2.6-month supply at the current sales pace. That is a slight improvement from May’s 2.5-month supply.
“We may have turned a corner on inventory,” said Lawrence Yun, NAR’s chief economist. “There is some softening in the demand.”
Low inventory continues to put pressure on prices. The median price of an existing home sold in June hit an all-time high of $363,300. That was 23.4% higher than the price in June 2020. Much of that gain, however, is skewed due to the types of homes that are selling. Sales of homes priced between $100,000 and $250,000 fell 16% annually. Sales of homes priced between $750,000 and $1 million jumped 119%.
“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”
Price gains could start to cool. New listings spiked 9% last week, compared with the same week one year ago, according to Realtor.com. Inventory saw its 15th straight week of tapering declines.
“Although more sellers entered the market last week, homebuyers may understandably feel frustrated with the continued shortage of affordable homes for sale,” said Danielle Hale, Realtor.com’s chief economist in a release. “The uptick in new listings offers a ray of hope for buyers trying to find a home and lock in still-low mortgage rates. With the public widely in agreement that now is a good time to sell, we may see even more new sellers in the coming weeks and the end of inventory declines before we finish out the year.”
Mortgage rates in April and May, when these contracts were signed, were slightly lower than in March. They moved within a very narrow range during the months, so they would likely not have played a role in prompting buyers to get in or pull out of the market.
Buyers are also seeing more competition from investors. They represented a 14% share of all sales, compared with just 9% one year ago. In addition, all-cash purchases, which are largely investors, rose to 23% of sales, up from 16% one year ago.