By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Sales of existing homes slipped in June, indicating a slight impact from rising mortgage rates but still marking the second-highest rate in about three-and-a-half years, according to data released Monday.
The National Association of Realtors said June home sales on a seasonally adjusted basis fell 1.2% to an annual rate of 5.08 million — the second-highest rate since Nov. 2009 — from a downwardly revised 5.14 million.
Economists polled by MarketWatch expected a 5.28 million rate after the NAR initially reported a 5.18 million rate in May. From a year ago, the level was 15.2% stronger, marking the 24th consecutive month of gains on a year-on-year basis.
The number was a bit of a disappointment given recent gains in pending home sales data, which represents contract signings but not closings. NAR Chief Economist Lawrence Yun said the pending home sales data can be more volatile, and also speculated that rising mortgage rates could have caused some buyers who agreed a contract to back out.
The rate on a 30-year fixed mortgage has risen above 4% this summer for the first time in a year. Rates slipped to 4.37% in the week ended July 18 from 4.51% in the prior week, according to Freddie Mac data. They were 3.45% in April. Read “Mortgage rates not a buyer stumbling block”
“I think the impact will begin to show up in coming months,” he said. High-priced homes like in California and New York may be most impacted, since rising rates make more of a difference on more expensive properties. Sales momentum is very strong in the middle of the country, Yun said.
The median price of a home was $214,200, a 13.5% gain from year-earlier levels. Prices in the summer typically represent the highest point of the year, since that’s prime moving season for families that tend to buy larger, more expensive homes. Read about why there’s no housing bubble — yet.
“This is not sustainable and this is not healthy,” Yun said. He said data showing a drop in housing starts in June was disappointing, as the NAR has frequently called for builders to create more supply.
Price gains were strongest in the West, with a 20% gain, while Northeast prices were up just 7%.
Inventories rose 1.9% to 2.19 million homes available for sale, though that’s 7.6% lower than a year. That represents 5.2 months of supply at current sales rates.
“We need to see an inventory increase from one year ago and it is unlikely to be the case this year,”
Distressed sales represented 15% of all transactions, the lowest since the NAR began tracking the data in 2008. Of the number, 8% were foreclosures and 7% were short sales.
All-cash transactions fell to 31% from 33% in May, though that’s still a very large percentage by historical standards. Investors accounted for 17% of all transactions, down from 18% in May. Yun said he’s not sure if that’s an anomaly or if investors are becoming more cautious.
First-time buyers accounted for 29% of all transactions, up from 28% in May but below normal levels of around 40%.
Steve Goldstein is MarketWatch's Washington bureau chief. Follow him on Twitter @MKTWgoldstein.
