June Existing Home Sales: Disappointing, But Not Surprising

• Existing home sales dropped 1.7% from May to a seasonally adjusted annual rate of 5.27 million in June. Sales were down 2.2% from a year ago, according to the National Association of Realtors.
• Inventory at the end of June climbed 1.0% from May to 1.93 million, staying flat from a year earlier.
• The median price for an existing home rose 4.3% from a year ago to $285,700, the 88th straight month of year-over-year gains.

After a good May and a recent rebound in pending sales, June’s lackluster existing home sales data is certainly disappointing – but not entirely surprising. Sales have struggled to achieve meaningful, consistent growth this year, despite friendly market conditions thanks to still-low mortgage rates and a strong labor market. Meager inventory levels, especially in the entry-level segment, and still-rising prices continue to limit the selection of homes available to more budget-conscious buyers. It’s not all bad news, however, and it’s important not to overreact to one disappointing report. Despite a lack of noticeable growth, the level of home sales has remained fairly steady after a lousy end to 2018. Purchase mortgage applications have grown consistently over the past few months and inventory levels are up in a number of large markets, admittedly from very low levels to begin with. Buyers are out there, and demand should remain steady enough to support current sales levels. As the busy spring home shopping season winds down, a sharp rise in sales is probably not on the horizon.