US existing home sales drop 0.6% in June

Sales of US existing homes unexpectedly fell in June, according to data from the National Association of Realtors.

Sales declined by 0.6% to a seasonally-adjusted annual rate of 5.38m from a downwardly-revised 5.41m in May. Sales for May were previously estimated at 5.43m. Economists had been expecting sales to pick up to 5.44m in June.

On the year, sales are now 2.2% lower and have fallen for the fourth straight month on an annual basis.

The median price of an existing home was $276,900, surpassing May as the new all-time high and up 5.2% from June last year. Meanwhile, total housing inventory at the end of June was up 4.3% to 1.95m existing homes available for sale.

Lawrence Yun, NAR chief economist, said: "There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining.

"The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "The dip in June sales is consistent with the message from the pending sales report for May. Actual sales have run above the pending sales numnbers, on average, since late last year, which probably explains why the consensus for June was too high. All the decline was in the core single-family component, where sales fell to a four-month low of 4.81M, from 4.84M in May.

Sales of condos/co-ops nudged up trivially. Inventory remains tight, though it is no longer falling, and prices for single-family homes continue to trend up by more than 5% y/y. But the time taken to sell homes is now levelling-off, after falling for more than three years. That's consistent with the flat-to-down trend in mortgage purchase applications, which we don't expect to change anytime soon. Home sales likely have peaked for this cycle, but a serious downtrend is still some way off."