Existing home sales drop in June; ‘Actual’ home sales highest in 12 months

Dennis NormanToday’s existing home sales report from the National Association of REALTORS® shows existing home sales in June were at at a seasonally adjusted-annual rate of 4.77 million units which is a decrease of 0.8 percent from the month before, a decrease of 8.8 percent from a year ago and is the lowest rate of home sales since November 2010 when it was 4.64 million.

Home prices increase for fourth-consecutive month….

The median home price in the U.S. in June was $184,300, an increase of 8.8 percent from the month before and an increase of 0.8 percent from a year ago when the median price was $182,900.

Number of homes for sale increases as does months supply….

The number of existing homes on the market increased in June by 3.3 percent to 3.765 million homes, and is down 3.1 percent from a year ago when there were 3.887 million homes for sale. Since the sales rate dropped and inventory grew, the supply of homes increased by 4.4 percent to 9.5 months from 9.1 months the month before and is 6.7 percent higher than a year ago when the supply was 8.9 months.

Metro Home Sales and Prices –

NAR publishes existing home sales for major metropolitan areas of the U.S. Highlights from that report for June include:

  • Up from 3 last month, this month 5 metro areas saw an increase in sales from a year ago with Miami-Ft. Lauderdale leading the way again with a whopping 24.5 percent increase in sales.
    • Phoenix, AZ again this month had the second largest year-over-year sales increase at 22.5 percent .
    • Atlanta, GA came in third with a 7.7 percent increase in sales.
  • Philadelphia, PA, after having the second highest decrease last month, had the highest decrease in sales from a year ago again this month, with a 29.6 percent decrease.
    • New York‐Northern New Jersey‐Long Island had the second highest decrease in sales from a year ago with a 17.7 percent decrease.
  • Six metros (up from 4 the prior month) saw year-over-year increases in home prices in June.
    • Cincinnati, OH, saw the largest one-year increase in home prices this month with a 5.6 percent increase, followed by Washington D.C. (the fourth-consecutive month at second) at 3.8 percent, then San Antonio, TX with a 3.6 percent increase.
    • St. Louis, MO saw the biggest one-year decrease in home prices this month, with a decline of 14.9 percent from the year before, followed by Atlanta, GA with a 14.7 percent decline and Phoenix, AZ with a 13.1 percent decline.

Lawrence Yun, NAR chief economist,

said this is an uneven recovery. “Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month,” he said. “The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year.”

Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers when artificial stimuli, such as tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

The following are the ACTUAL Existing Home sales for June, 2011 reported by NAR without any adjustment or fluff:

  • There were 508,000 existing homes sold during the month which is an increase of 11.2 percent from the month before and a 8.5 percent decrease from a year ago. This is the most homes sold in a month since June, 2010 when there were 555,000 homes sold.
  • Below are highlights from each region for the month;
    • Northeast – 79,000 homes sold, an increase of 12.9 percent from the prior month a decrease of 16.8 percent from the year before.
    • Midwest – 114,000 homes sold, an increase of 9.6 percent from the prior month and a decrease of 13.0 percent from the year before.
    • South – 194,000 homes sold, an increase of 12.8 percent from the prior month and a decrease of 5.4 percent from the year before.
    • West – 121,000 homes sold, an increase of 9.0 percent from the prior month and a decrease of 2.4 percent from the year before.

Other highlights of the NAR Report for June 2011:

  • Distressed sales accounted for 30 percent of all home sales for the month, down from 31 percent the month before.
  • First-Time homebuyers accounted for 31 percent of the home sales for the month, down from 36 percent the month before.
  • Investors were the buyers of 19 percent of the homes for the month, the same as the month before.
  • Repeat home buyers were responsible for approximately 50 percent of the month’s sales, up from 46 percent the month before.
  • Cash buyers were 29 percent of all sales for the month, down from the prior months’ 30 percent.

My Take On the Numbers:

I still think the market, in many areas, has found it’s bottom and is going to muddle along bottom for some time. Over the next year or so we should see distressed sales’ share of the market continue to decline which will take some pressure off home prices and allow prices to stabilize. As prices stabilize I think we will see increased sales activity, although the recovery is going to be a long, slow one.

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