Home sales at 10 year low
Realtors' group says the number of existing homes sold in June fell 2.6% to their lowest level in 10 years.
NEW YORK (CNNMoney.com) -- Sales of existing homes in June slowed more than expected and hit their lowest level in 10 years, according to an industry trade group report released on Thursday.
The National Association of Realtors reported that sales by homeowners dipped in June to an annual pace of 4.86 million, down 2.6% from a pace of 4.99 million in May.
That's the lowest rate on record since the first quarter of 1998, when existing home sales fell to an annual pace of 4.83 million, according to Walter Molony, spokesman for NAR.
The existing home sales rate - including single-family, town homes, condominiums and co-ops - is down 15.5% from the 5.75 million units sold in June 2007.
The 4.86 million sales figure came in well below the 4.95 million estimate forecast by economists surveyed by Briefing.com.
"The factors that are weighing on the housing market remain in place - weak consumer confidence, a weak labor market and rising mortgage rates - so there are some strong fundamental headwinds still weighing on the market," said Robert Dye, senior economist at PNC Financial Services Group.
"We are hoping for a bottom, but we are not expecting any significant rebound from that bottom until the labor market and consumer confidence starts to improve," he added.
But with inventory still on the rise, home prices are falling further. The number of homes available for sale at the end of June rose 0.2% to 4.49 million, which represented an 11.1-month supply of inventory at the current sales pace, up from a 10.8-month supply in May.
Meanwhile, the median price of a home sold in June fell to $215,100, down 6.1% from $229,000 a year earlier.
Single family homes. Sales of single-family homes declined 3.2% to an annual rate of 4.27 million in June from 4.41 million in May. That's 14.8% below the 5.01 million-unit pace in June 2007.
The median existing single-family home price was $213,800 in June, down 6.7% from a year ago.
New homeowners. First-time home buyers are not confident that this is the best time to enter the market. "A recent online survey of Realtors shows nearly a quarter of potential home buyers are waiting on the sidelines," NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said in a written statement.
"About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up," according to Lawrence Yun, NAR's chief economist.
Rising rates. Higher interest rates are also holding buyers back. "Even as prices are coming down, the total mortgage price is under upward pressure from rising mortgage rates," said Dye.
"Market concerns about rising inflation, further weakness in the housing market and greater probability that the Federal Reserve will raise short-term rates this year all combined to push mortgage rates higher this week," Frank Nothaft, Freddie Mac vice president and chief economist, said in a written statement.
Regional sales breakdown. Existing-home sales in the West actually rose 1.0% in June, but were 6.4% lower than a year ago. Buyers were attracted to bargain prices, with are down 17.2% from June 2007.
In the South, existing-home sales fell 3.1% from May to June, and 18.1% year-over-year. Home prices in the South have only fallen 2.4% from a year ago.
Midwest existing-home sales declined 3.4% in June, and slid 17.6% from a year ago. But the median price there was actually up 2.8% from June 2007.
June existing-home sales fell 6.6% in the Northeast on a month-to-month basis and dipped 15.8% from June 2007. The median price was also down sharply, 12.6% below June 2007.
Despite the decline in the housing market as a whole, there are a few bright spots. The NAR says that existing-home sales are actually rising significantly from a year ago in areas that have been particularly hard-hit by the housing bust, such as Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas, Nev.
In addition, "sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.," Yun said in a written statement. "Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions."
Housing bill. The report came a day after the House passed a bill that will provide up to $300 billion to help struggling homeowners and will back the mortgage finance giants Fannie Mae and Freddie Mac. The bill will go to the Senate next for vote.