US home sales fell in July amid inventory shortage

FILE - This Wednesday, May 18, 2016, file photo shows a "Sold" sign in front of a house in Walpole, Mass. On Wednesday, Aug. 24, 2016, the National Association of Realtors reports on sales of existing homes in July. (AP Photo/Steven Senne, File)

WASHINGTON — US homebuyers pulled back in July, as sales declined amid a shortage of available properties and steadily rising prices.

Sales of existing homes fell 3.2 percent last month to a seasonally adjusted annual rate of 5.39 million, the National Association of Realtors said Wednesday. The decline marks a reversal from rising demand that pushed sales in June to their highest level since February 2007.

Fewer homes are coming onto the market, putting a cap on the sales growth enjoyed earlier this year thanks in part to a low mortgage rate and brightening job market. Rising demand for homes is a positive. But the dwindling supply of listings has pushed up prices, which suggests a market not yet at full health.

This mismatch between supply and demand creates an environment of limited sales growth and escalating home values.

"Sales are not rising as much as they are capable of, but prices are rising at a faster than sustainable clip," said Stephen Stanley, chief economist at Amherst Pierpont Securities.

The number of listings has tumbled 5.8 percent from a year ago to 2.13 million, meaning that would-be homebuyers are struggling to find attractive properties in their price range and may be delaying their purchases.

Inventories have fallen on an annual basis for the past 14 months, an indication that many homeowners are still recovering financially from the housing bust that triggered the Great Recession almost a decade ago. Without sufficient equity in their current homes, many of these owners would be unable to generate a down payment for another home with the proceeds from a sale.

The decrease in listings has corresponded with home values rising at more than double the pace of average hourly earnings, making many homes less affordable for potential buyers.

The median home sales price was $244,100 in July, up 5.3 percent from a year ago.

Sales last month fell 13.2 percent in the Northeast, with declines in the Midwest and South as well. Purchases rose 2.5 percent in the West in July.

Builders are attempting get more homes on the market. Sales of new homes climbed 12.4 percent last month to a seasonally adjusted rate of 654,000 annual units, the strongest level since October 2007, the Commerce Department said Tuesday.

Yet demand has eclipsed even that surge. Just 4.3 months' supply of new homes is available on the market, down from 5.2 months a year ago.

"Homebuilders continue to thrive on healthy demand while homebuyers remain stifled by anemic inventory," said Ralph McLaughlin, chief economist at Trulia.

One thing that would-be buyers have in their favor, in addition to the improved landscape for jobs, is near record-low mortgage rates.

Mortgage buyer Freddie Mac said the average 30-year fixed-rate mortgage fell to 3.43 percent last week from 3.98 percent a year ago. The average rate has historically been closer to 6 percent.

Must Read

The hidden risk to the economy in corporate...

Aug 24, 2016

America has a debt problem, and the big borrower this time may surprise you: Corporate America

Yellen suggests rate hike is coming but offers no...

Aug 26, 2016

Yellen says 'the case for an increase' in rates has strengthened but offers no timetable

Europe hits Apple with a $15 billion-plus tax bill

Aug 30, 2016

The European Union has ordered Apple to pay nearly $15 billion in back taxes to Ireland, plus...

USDA to reopen offices closed after email threats

Aug 31, 2016

The Agriculture Department will reopen some offices that were closed Tuesday after an unspecified...

SEC: Former Monsanto exec to get $22.5M as...

Aug 30, 2016

A former Monsanto executive who tipped off regulators about the agribusiness' accounting practices...

Sign up now!

About Us

In The Headline sought to bring professionalism back into journalism, bringing you only the most exclusive and the most impactive news from all over the globe.

Contact us: sales[at]intheheadline.com