Market Recap: Existing Home Sales Decline, New Home Sales Increase Slightly, Case-Shiller Home Price Index
Mortgage rates ticked back upwards this week, though there are no significant changes to report. Existing home sales declined after last month’s positive numbers. The S&P CoreLogic Case-Shiller home price index continues to improve. New home sales increased, only slightly.
Existing home sales, or resales, track the sales of previously constructed homes and make up most real estate transactions. In June, existing home sales dropped sharply, down 1.8% to a seasonally adjusted annual rate of 5.52 million. Year-over-year, existing home sales improved somewhat, up 0.7%. National Association of Realtors (NAR) chief economist Lawrence Yun explains, “the demand for buying a house is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”
The Case-Shiller home price index tracks changes in the value of homes involved in two or more sales transactions across 20 major metropolitan areas in the United States. In May, the index improved 0.1% month-over-month and 5.7% year-over-year. Appreciation was driven by strong gains in the Pacific Northwest and Denver.
New home sales, or the sales of newly-constructed homes, improved by 0.8% from May to June and a significant 9.1% year-over-year to a seasonally adjusted annual rate of 610,000. New home sales data can be somewhat volatile due to the smaller sample size. In June, the median price of a new home was $310,800, a surprising 3.3% decrease from the median price last year. Currently, inventory levels would be exhausted in 5 months, a substantial increase from May’s 4.6 months.
The spring and summer selling season was largely restricted by constrained housing inventory. As homebuilders struggle with rising supply costs and a limited labor force, demand may continue to outpace supply. With rates still historically low, many prospective buyers are trying to buy before further rate hikes.
Sources: Bloomberg, CNBC, Forbes, MarketWatch, Mortgage News Daily