Existing-Home Sales Slow in June 2010 but Remain Above Year-Ago Levels


July 23, 2010

With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June 2010 but remained at relatively elevated levels, according to the National Association of Realtors.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1% to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8% higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said.

“Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74% in June from 4.89% in May; the rate was 5.42% in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0% higher than a year ago. Distressed homes were at 32% of sales last month, compared with 31% in May; it was also 31% in June 2009.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors bring to buyers and sellers in this market.”

A parallel NAR practitioner survey shows first-time buyers purchased 43% of homes in June, down from 46% in May. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers. All-cash sales were at 24% in June compared with 25% in May.

Total housing inventory at the end of June rose 2.5% to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May.

“The supply of homes on the market is higher than we’d like to see. But home prices are still holding their ground because prices had already overcorrected in many local markets,” Yun said. Raw unsold inventory remains 12.7% below the record of 4.58 million in July 2008.

Single-family home sales fell 5.6% to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5% above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3% from a year ago.

Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.

Existing condominium and co-op sales slipped 1.5% to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5% higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June, which is 1.4% below a year ago.

Regionally, existing-home sales in the Northeast rose 7.9% to an annual level of 960,000 in June and are 17.1% above June 2009. The median price in the Northeast was $244,300, down 1.2% from a year ago.

Existing-home sales in the Midwest dropped 7.5% in June to a pace of 1.23 million but are 11.8% higher than a year ago. The median price in the Midwest was $155,900, down 0.1% from June 2009.

In the South, existing-home sales fell 6.5% to an annual level of 2.01 million in June but are 11.0% above June 2009. The median price in the South was $163,600, unchanged from a year ago.

Existing-home sales in the West dropped 9.3% to an annual pace of 1.17 million in June but are 0.9% higher than a year ago. The median price in the West was $221,800, up 1.5% from June 2009.