Tight Inventory, Higher Prices Dampen Existing Home Sales

Sales in the Northeast declined 14.5 percent and dropped 5.3 percent in the Midwest. Sales fared better in the West and South with increases of 5.0 percent and 2.2 percent, respectively.

The median price for existing homes rose 6.2 percent year-over-year to $258,300 in July for the 65th consecutive gain. Median price increased in all regions of the U.S.: Northeast 4.1 percent, Midwest 5.9 percent, South 6.7 percent, and West 7.6 percent.

Tight inventory continues to be a problem, dipping 1 percent to 1.92 million homes, 9 percent lower than a year ago. Inventory stands at a 4.2 month supply at the current sales pace.

“Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” said Lawrence Yun, NAR chief economist. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”

“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”

Listing-to-contract times have been less than a month, said Yun. With inventory levels low and new construction lagging, the market is likely to remain competitive into the fall months, he added.