Sales of existing homes slipped in June, indicating a slight impact from rising mortgage rates but still marking the second-highest rate in about 3 years, according to data released Monday.
The National Association of Realtors said June home sales, on a seasonally adjusted basis, fell 1.2 percent to an annual rate of 5.08 million — the second-highest rate since November 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 percent 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 represent contract signings but not closings. NAR Chief Economist Lawrence Yun said the pending-home-sales data can be more volatile and speculated that rising mortgage rates could have caused some buyers who had agreed on a contract to back out.
The rate on a 30-year fixed mortgage has risen above 4 percent this summer for the first time in a year. Rates slipped to 4.37 percent in the week ended July 18 from 4.51 percent in the prior week, according to Freddie Mac data. They were 3.45 percent in April.
“I think the impact will begin to show up in coming months,” he said. High-priced homes in such places as California and New York may be most affected, 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 decline in sales could be seen as evidence of housing already being hurt by the rise in mortgage rates, but we think it is largely payback after exaggerated strength in May,” added Jim O’Sullivan, chief economist of High Frequency Economics, in a note to clients.
The median price of a home was $214,200, a 13.5 percent gain from year-earlier levels. Prices in the summer typically represent the year’s high point, since that’s prime moving season for families, which tend to buy larger, more expensive homes.
“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 percent gain, while prices in the Northeast were up just 7 percent.
Inventories rose 1.9 percent to 2.19 million homes available for sale, though that’s 7.6 percent lower than a year. That represents 5.2 months’ worth 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,” Yun said.
Distressed sales represented 15 percent of all transactions, the lowest proportion since the NAR began tracking the data in 2008. Those were split between foreclosures, at 8 percent, and short sales, at 7 percent.
All-cash transactions fell to 31 percent from 33 percent in May, though that’s still a large percentage by historical standards. Investors accounted for 17 percent of all transactions, down from 18 percent in May. Yun said he’s not sure whether that’s an anomaly or if investors are becoming more cautious.
First-time buyers accounted for 29 percent of all transactions, up from 28 percent in May but below normal levels of around 40 percent.