Existing-Home Sales Hit Highest Level Since October
• June's Existing Home sales were up 2.3% from May, the 3rd consecutive monthly increase, reaching an annual pace of 5.04 million.
• Existing home Inventory was up 6.5% from a year earlier - 5.5 months supply.
• Median home prices were $223,300, up 4.3% from the year earlier.
• First time buyers represented 28% of all sales, low by historic standards as the jobs market remains sluggish.
• Distressed sales slide to 11% of total sales as fewer investors entered the market.
• June sales were down 2.3% from last year. However, 3 consecutive months of rising sales seems to indicate the housing market is recovering from a harsh winter.
• Borrowing rates remain near record lows at 4.13%
WASHINGTON—A broad measure of U.S. home sales climbed for the third consecutive month in June, hitting the highest level since October as the housing market gained steam after a monthslong slump.
Sales of previously owned homes rose 2.6% to a seasonally adjusted annual rate of 5.04 million last month, the National Association of Realtors said Tuesday. Revisions showed May sales reached a 4.91 million rate, up from an initially reported 4.89 million pace.
The latest rise suggests the housing market rebounded from a harsh winter and that slowing price growth, coupled with expanding inventory, could set the market up for future gains. "We are seeing a more broad-based recovery," said Lawrence Yun, the Realtor trade group's chief economist. He pointed to a slight increase in purchases by first-time home buyers, sales rising across all four regions in the U.S. and healthy sales of both single-family homes and condominiums last month.
Tuesday's report showed home prices are growing more slowly than in prior months as more homes come on the market. The median sale price for a home last month was $223,300, up 4.3% from a year earlier.
The inventory of homes available for sale climbed 6.5% from a year earlier. At the current pace, it would take 5.5 months to exhaust the supply, a level close to what economists consider a sign of a balanced market.
One reason sales haven't reached year-ago levels is that fewer investors are entering the market, Mr. Yun said. The share of June sales going to investors was flat at about 16%, down from 19% just two years ago. As a result, purchases of "distressed" properties—such as those in foreclosure—slipped as a share of overall sales.
First-time buyers are growing slightly, but at 28% of all buyers, they remain a historically small part of the market.
Despite the latest gains, the market hasn't regained its earlier momentum. Compared with a year earlier, sales were down 2.3% last month. At the current pace, sales are roughly at the level they were in 2000, even though the U.S. population has grown, the economy has more jobs and interest rates remain historically low. Mr. Yun said the housing market is still "underperforming."
Existing-home sales make up roughly 90% of all home purchases. Home sales were robust in 2012 and the first half of 2013, underpinning the U.S. recovery. But sales slowed in the middle of last year as a rise in mortgage rates and a run-up in prices likely scared away some prospective buyers. Harsh winter weather also likely sapped activity.
Borrowing rates have fallen this year, likely helping to boost sales in the crucial spring selling season. The average rate on a 30-year mortgage fell to 4.13% last week, below year-ago levels, according to Freddie Mac. FMCC +0.48%
Still, clouds loom. The Federal Reserve has signaled it will end its bond-buying stimulus program in October; those bond purchases are credited with pushing down interest rates. A rise in interest rates, as anticipated, would raise the cost of purchasing a home at a time when Americans' incomes are growing meekly.
"Without a better pace of income growth, any increase in mortgage rates…will take a bite out of home sales," said Richard Moody, chief economist at Regions Financial Corp. "So, while June's report is encouraging, the real test will be whether or not improving sales will be sustained over coming months."
