Us home sales see summer slide

Photo credit: Michael Patrick

US home sales saw a summer slide last month, according to new figures, dipping from a nine-year high in May. The data from the National Association of Realtors shows that sales fell 1.8 per cent in June 2015, reversing five months of increases in a row. The Midwest and South led the downturn, offsetting modest gains in the Northeast and West.

Despite the decline, though, the market's recovery is evident on a longer-term basis: the pending home sales index is 8.2 per cent higher than a year ago, the 10th month of annual rises in a row and its third highest reading of 2015.

Lawrence Yun, NAR chief economist, says although pending sales decreased in June, the overall trend in recent months supports a solid pace of home sales this summer.

"Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers' comfort level," he comments. "The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows."

According to Yun, existing-home sales are up considerably compared to a year ago despite the share of first-time buyers only modestly improving1. The reason is that the boost in sales is mostly coming from pent-up sellers realizing their equity gains from recent years.

"Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down," he adds. "Unfortunately, because nearly all of these sellers are likely buying another home, there isn't a net increase in inventory. A combination of homebuilders ramping up construction and even more homeowners listing their properties on the market is needed to tame price growth and give all buyers more options."