Existing home sales fell 0.6% month-over-month in June to a seasonally adjusted annual rate of 5.38 million. The consensus among economists surveyed by Briefing.com called for an annual rate of 5.45 million units.
The May sales rate was revised down to a 5.41 million annual rate from 5.43 million.
Total sales in June were 2.2% lower than in the same period a year ago and have now tumbled year over year for four straight months.
The housing sector is very sensitive to shifts in macroeconomic factors such as interest rates and income growth.
Which is why it’s worth considering that the housing market may be trying to tell us something about the trend in the overall economy.
That something?
The the economy could use a boost from faster income growth.
In the housing market a limited inventory of houses and high prices on those houses is cutting into buying, especially by first-time buyers, because incomes haven’t been rising as fast as home prices. (The median existing single-family home price was $279,300, up 5.2% from a year ago.)
There was a tiny glimmer of good news on inventory in the June report. The inventory of homes for sale at the end of June increased 4.3% to 1.95 million. That’s a 0.5% increase in inventory from the same period a year ago. This is the first increase in inventory since June 2015. Unsold inventory rose to a 4.3-month supply at the current sales pace, versus 4.2 months a year ago. A 6 -month supply has been the long-term mark of a balanced market.
One unanswered and perhaps unanswerable question: Is the prospect of higher interest rates damping current sales or is it actually supporting sales numbers by pushing more buyers into the market ahead of the next round of interest rate increases from the Federal Reserve?
