Existing Home Sales Drop but Price Rise Continues

NEW YORK ( TheStreet) -- Existing home sales unexpectedly fell in June from the previous month, though levels are still higher than a year ago and prices continued to climb.

According to the National Association of Realtors, existing home sales dipped 1.2% to a seasonally adjusted annual rate of 5.08 million, down from a downwardly revised 5.14 million in May. Still, were 15.2% higher than a year earlier.

Economists polled by Bloomberg expected existing home sales to rise to an annual sales rate of 5.27 million from the original estimate of 5.18 million sales rate reported for May.

Existing home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops, based on transaction closings from Multiple Listing Services (MLS). Existing home sales account for more than 90% of the total home sales in the economy.

Single-family home sales slipped 1.1 percent to a seasonally adjusted annual rate of 4.50 million in June from 4.55 million in May, but were 14.5 percent above the 3.93 million-unit pace in June 2012.

The dip in sales coincided with a sharp rise in mortgage rates. According to Freddie Mac, the 30-year, conventional, fixed-rate mortgage rose to 4.07 percent in June from 3.54% in May, the highest level since October 2011 when it was also 4.07 percent. The 30-year conventional fixed-rate was 3.68% in June 2012.

Still, the national median existing- home price was $214,200 in June, up 13.5% from a year earlier, marking the 16th consecutive month of year-over-year price increases. The median existing single-family home price was $214,700 in June, which is 13.2% above a year ago.

Inventory rose 1.9% to 2.19 million units, representing 5.2 months' supply of existing homes at the current sales pace.

The supply-demand balance is still tilted in favor of the seller, with listed inventory still 7.6% below a year ago. "Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth," NAR's chief economist Lawrence Yun said in a statement.

The median time on market for all homes was 37 days in June, down from 41 days in May. During June 47% of all home sales were on the market for less than a month.

Yun said there is enough momentum in the market despite higher rates. "Affordability conditions remain favorable in most of the country, and we're still dealing with a large pent-up demand," he said. "However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market."

First-time buyers accounted for 29% of the purchases in June, up from 28% in May, but below 32% a year earlier. Historically, first-time home buyers have accounted for about 40% of the purchases. Extraordinarily tight credit conditions have kept buyers out of the market.

All-cash sales made up 31% of transactions in June, down from 33% in May, but up from 29% in June 2012. Investor purchases are slowly declining as the number of distressed transactions decline.

Distressed homes - foreclosures and short sales - were 15% of June sales, down from 18% in May, and are the lowest share since monthly tracking began in October 2008, the report said.

A separate survey by Campbell/Inside Mortgage Finance Monday found that current homeowners now account for a greater share of the purchases. Here's more from their press release.

"Current homeowners were the only group that saw its share of home purchases rise last month - from 43.8 percent in May to 44.6 percent in June based a three-month moving average. First-time homebuyers witnessed a slight drop in market share, going from 36.0 to 35.7 percent during the same one-month period. But the bigger story was the continuing slide in investor participation in the housing market. In June, the investor share of home purchase transactions fell to 19.7 percent, HousingPulse results show. That was down from a 23.1 percent share found as recently as February and the lowest level recorded since September of 2012."

-- Written by Shanthi Bharatwaj New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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