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Housing sales fall as fewer first-time buyers go shopping
WASHINGTON — Fewer people bought previously occupied homes in June, putting
this year on pace to be the worst for sales since the housing bust.
Home sales fell 0.8% last month to a seasonally adjusted annual rate of 4.77 million
homes, the National Association of Realtors said Wednesday. That's far below the 6
million homes per year that economists say represents a healthy housing market.
June's decrease was the third straight monthly decline in sales. Through the first six
months of this year, the sales pace is behind last year's 4.91 million homes sold —
the weakest sales in 13 years. Sales have fallen in four of the past five years.
The Realtors' group said a record number of people who signed contracts canceled
deals last month. And first-time buyers fell to a smaller share of the market.
Single-family home sales held steady in June. But condo sales fell 7%.
Bigger down payments, tougher lending rules, high debt and a shortage of desirable
starter homes are keeping many would-be buyers away. Even some with good credit
and enough money for a down payment are holding off because they are worried
home prices will keep falling.
The weaker housing market has kept many people from selling their homes and
taking new jobs in growing areas. At the same time, the slowdown in hiring has
made many cautious about taking on debt.
"It all goes back to uncertainty about the future and hiring," said Jennifer Lee,
senior economist at BMO Capital Markets.
First-time homebuyers made up just 31% of sales. They normally make up about
half of all home sales. First-time buyers are critical to a strong and stable housing
market. They tend to keep their homes for years. What's more, their purchases of
low and moderately priced homes allow sellers to move up to pricier homes.
Another growing problem: Some sales that are under contract and almost finished
are falling apart at the last minute. Roughly 16% of home deals were canceled last
month. That's four times the number in May and the highest level since such
records began being kept more than a year ago. A sale isn't final until a mortgage is
closed.
Re-sold homes are a bargain compared to new homes. The median price of a new
home is more than 30% higher than the median price for a previously occupied
home. That's twice the normal markup.
Foreclosures and short sales — when a lender agrees to sell for less than what is
owed on a mortgage — made up about 30% of all home sales last month, up from
about 10 percent in past years. And a wave of foreclosures are being held up, either
by backlogged courts or lenders awaiting state and federal probes into troubled
foreclosure practices.
Investors have targeted foreclosures and other deeply discounted properties. They
accounted for 19% of sales in June.
The median sales price jumped nearly 9% in June from May, to $184,300. It was
mainly because of seasonal factors that led to a big increase in prices in the
Northeast and West.
The glut of unsold homes rose slightly in June to 3.77 million homes. At last
month's sales pace, it would take 9.5 months to clear those homes. Analysts say a
healthy supply can be cleared in six months.