Sales of existing homes in the US fell for the third consecutive month in June. A shortage in inventory and a rise in prices are said to be the reasons for the decline in the purchase of homes. According to the National Association of Realtors, the seasonally adjusted annual rate for home sales was 5.38 million in June. This reflected a drop of 0.6% versus the previous month. When compared to the same period a year ago, sales fell 2.2%.
The continued slowdown over the past three months points to several challenges in the housing market. The growth in employment and wages have boosted the demand for homes, but this increase in demand combined with a shortage of homes has led to price increases. Increases in mortgage rates have led to high costs for buying homes and the recent tax bill also reduced the benefits of owning homes.
However, during June, inventory rose by 0.5% to 1.95 million compared to a year ago. This increase, which was the first one seen in around three years, could perhaps be a sign that the shortage is ending. Economists are waiting to see if this increase will continue going forward or if it was merely a one-time occurrence. An increase in inventory would lead to an increase in buyers.
The median sales price for a previously-owned home increased 5.2% in June to $276,900 compared to last year. In the West, this rate was double, with the median sales price rising 10.2% to $417,400 from the previous year. The West region also saw a drop in sales during June. There needs to be an increase in first-time buyers for the housing market to gain strength.
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