U.S. Previously Owned Home Sales Decline More Than Forecast

(Bloomberg) -- Sales of previously owned U.S. homes declined in June, missing estimates in the latest sign of weakness for the housing market as a limited supply of low- to mid-priced properties continued to restrain demand.

Contract closings dropped to 5.27 million annual rate, down 1.7% from May’s upwardly revised pace, the National Association of Realtors said Tuesday. Economists surveyed by Bloomberg projected a 5.32 million pace. The median sales price rose 4.3% from a year earlier to $285,700.

Key Insights

• Sales decreased 2.2% from a year ago as a lack of affordable properties continues to weigh on the sector. While mortgage rates around the lowest level since 2017 have yet to spur a big boost to demand, consumers remain in a good spot with unemployment near a five-decade low and steady wage gains.
• The figures are consistent with recent data showing persistent softness in the housing sector after a weak 2018. Housing starts fell for a second month in June with permits at a two-year low, suggesting tight inventory may remain a headwind for buyers. Residential investment hasn’t contributed to gross domestic product growth since 2017, and second-quarter GDP data due Friday will show whether the housing market continued to be a drag on growth.
• “Sales refuse to break out higher,” Lawrence Yun, NAR’s chief economist, said at a briefing in Washington. “It doesn’t make economic sense” with job creation, rising wages and the stock market reaching records.

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• Economists surveyed by Bloomberg projected a 5.32 million sales pace in June. May’s reading was revised from 5.34 million.
• Home purchases declined in the South, the biggest region, to the slowest rate since January. Sales fell to a three-month low in the West. They increased in the Midwest and Northeast.
• At the current pace, it would take 4.4 months to sell all the homes on the market, the highest since September and compared with 4.3 months in May; Realtors see anything below five months of supply as a sign of a tight market.
• First-time buyers made up 35% of sales, up from 32% the previous month.
• Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are counted when contracts are signed and will be released Wednesday.

To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns, Vince Golle

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