Inventory is picked-over and buyers suffer from “a lack of excitement,” an industry group said.
Sales of previously-owned homes fell in July as tight inventory continued to weigh on the market and prices pushed higher.
Existing-home sales declined 3.2% to a seasonally adjusted annual rate of 5.39 million, the National Association of Realtors said Wednesday. That was 1.6% lower compared to a year ago.
The July figures were lower than the 5.48 million pace forecast by economists surveyed by MarketWatch.
NAR Chief Economist Lawrence Yun attributed the decline to leaner inventory and higher prices. Inventory was 5.8% lower than a year ago, the 14th month in a row of yearly declines. There were 4.7 months’ worth of homes available at the current sales pace.
The median home price rose to $244,100. That’s 5.3% higher than a year ago, a faster pace of growth than wages and also much stronger than rental costs. Such strong price appreciation makes it harder for renters to become owners, Yun noted.
It also keeps a lid on the entry of first-time buyers into the market. First-timers accounted for 32% of all transactions in July, down a tick from 33% in June but still above the 29% threshold it had been stuck at for some time.
July’s decline followed a more-than 8-year high in June, so some pullback was expected, Yun said. “I believe demand is not going away, it’s just lack of excitement over inventory.”
Yun also noted that many realtors have complained of delays with appraisals. That may be in part due to a surge in refinancings since the U.K. Brexit referendum pushed mortgage rates lower, or it may have to do with the industry adjusting to higher home prices, Yun said. If those conditions ease, August sales figures could reflect some catch-up.