The 1.8 percent decline in existing-home sales in June should come as no surprise if you closely follow NAR’s Pending Home Sales Index, which have declined for three straight months.
Activity has been weaker lately because prospective buyers continue to struggle overcoming the severely restricted inventory conditions and consequent run-up in home prices.
As NAR Chief Economist Lawrence Yun pointed out during today’s press conference, the slide in sales is not a demand problem. There simply is not enough inventory for sales to grow at a pace that reflects the very healthy job market. Yun stressed the need for more inventory to alleviate the rapid price growth in some areas that far exceeds people’s incomes.
One tidbit of positive news from today’s release is that at least for one month, investors and cash buyers stepped away. If their activity withdraws even more in coming months, first-time buyers stand to benefit. Through the first six months of the year, they’ve only made up 32 percent of sales, which is not close to the long-term historical average of near 40 percent.