It’s no shock that existing home sales increased again this month, marking the fourth consecutive month of increases, according to the National Association of Realtors.
What is new, however, is that these home sales were boosted by a flood of first-time homebuyers entering the market, the largest quantity in four years, in fact.
The Northeast was the only outlier, with a decline in closings in June as sales fell to their lowest overall share since July 2009.
“Sales of existing homes were unexpectedly strong in June, edging up for the fourth consecutive month to a nine-year high and defying expectations for a modest monthly decline,” Zillow Chief Economist Svenja Dudell said. “The gain is even more surprising given a continued shortage of homes available for sale, with inventory down almost 6% compared to the same time a year ago.”
The total existing home sales, completed transactions that include single-family homes, town homes, condominiums and co-ops, increased by 1.1% to a seasonally adjusted annual rate of 5.57 million in June, up from May’s downwardly revised 5.51 million.
Sales are now up 3% from June 2015, and remain at their highest annual pace since February 2007, when sales were at 5.79 million.
“Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” NAR Chief Economist Lawrence Yun said. “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases.”
On the other hand, there is a question about whether this pace can continue in the coming months.
“Looking ahead, it’s unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing,” Yun said.
The median existing home price in June hit $247,000, an increase of 4.8% annually, according to the report. June’s increase marks the 52nd month of annual increases, and even surpassed May’s peak median sales price of $238,900.
“Existing home sales edged out a small gain in June, helped by a rise in first-time buyer numbers,” Capital Economics Property Economist Matthew Pointon said. “But the months’ supply of homes for sale has fallen to its joint-lowest level for 11 years, and the recent drop in mortgage rates following the Brexit result has not given mortgage applications for home purchase a boost.”
“Therefore, it seems unlikely that existing home sales will continue to rise,” Pointon concluded.