U.S. Existing Home Sales Drop In June, But Prices Climb Nearly 14% From Year Earlier

[Purveyor]

Source: FinancialPosts

Sales of previously owned houses unexpectedly dropped in June, hurt by a lack of supply and rising mortgage rates that will slow the rebound in the U.S. real-estate market.

Purchases fell 1.2% to a 5.08 million annualized rate, the National Association of Realtors reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg called for a 5.26 million pace. The pace of the demand was the second strongest since November 2009 following May’s downwardly revised 5.14 million rate.

The number of houses for sale at the end of last month were the fewest for any June since 2001 as rising prices depleted the number of cheaper houses on the market. Federal Reserve Chairman Ben S. Bernanke last week said housing was one of the bright spots for growth and added that policy makers will monitor the recent jump in interest rates to ensure it won’t derail the nascent recovery.

“What’s holding sales down is just that there’re just not a lot of homes for sale,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We’re not expecting really strong numbers for the rest of the year even though the housing market is getting hot. What you’re seeing is this pent-up demand show up in higher prices, not in higher sales.” He projected a June sales rate of 5.12 million.

Read more: http://business.financialpost.com/2013/07/22/us-existing-home-sales-june/

[geek tragedy]

1. Inventory won't go up until some combination of a) home prices going up even further to

entice more listings, particularly for those looking to retire, and b) confidence in would-be sellers that they can find a new place to live after selling.

[liberalmike27]

2. Over in My Mothers Neighborhood

On one quarter-mile block, there are about five homes for sale. Some "seem" unoccupied, as we walk, and never see much activity. Those are on top of the others, that have "for sale" signs in front of them.

It seems incongruous, that inventory is low, and sales prices are rising. I still think they need to fall, with wages, which I suspect are generally continuing to fall.

[theHandpuppet]

3. Must depend on where you live

I suspect the demand varies wildly depending upon the area. You can't even give away homes here. They can sit on the market for years until they are sold at some lowball price at auction, usually to slumlords.

[NickB79]

4. Home building has EXPLODED in my area

Dakota County, MN, just south of Minneapolis/St. Paul.

New single-family and condo developments are everywhere these days. Most of them appear to be running around $300K to start, though, so I have no idea where people are getting that sort of money.