Existing home sales in the U.S. tumbled by much more than anticipated in the month of July, according to a report released by the National Association of Realtors on Wednesday.
NAR said existing home sales slumped 3.2 percent to an annual rate of 5.39 million in July from 5.57 million in June. Economists had expected sales to dip by 0.9 percent to a rate of 5.52 million.
With the steep monthly decline, existing home sales are down by 1.6 percent compared to the same month a year ago, reflecting the first year-over-year drop since November of 2015.
"Severely restrained inventory and the tightening grip it's putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month," said NAR chief economist Lawrence Yun.
He added, "Realtors are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows."
The report said there were 2.13 million existing homes available for sale at the end of July, up 0.9 percent from 2.11 million at the end of June but down 5.8 percent from 2.26 million a year ago.
The unsold inventory represents 4.7 month of supply at the current sales pace compared to 4.5 months of supply in June.
NAR also said the median existing-home price for all housing types was $244,100 in July, up 5.3 percent from $231,800 in the same month last year. July's price increase marks the 53rd consecutive month of year-over-year growth.
Single-family home sales dropped 2.0 percent to a rate of 4.82 million, while existing condominium and co-op sales plunged 12.3 percent to a rate of 570,000.
On Tuesday, the Commerce Department released a separate report showing a substantial increase in new home sales in the month of July.
The report said new home sales jumped 12.4 percent to an annual rate of 654,000 in July from the revised June rate of 582,000.
The sharp increase in new home sales came as a surprise to economists, who had expected sales to drop to a rate of 580,000 from the 592,000 originally reported for the previous month.
With the unexpected increase, new home sales reached their highest annual rate since October of 2007.
by RTT Staff Writer
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