U.S. home sales fell for a third straight month in June as a persistent shortage of properties on the market pushed up house prices to a record high, likely sidelining some potential buyers.
The National Association of Realtors said on Monday existing home sales fell 0.6 percent to a seasonally adjusted annual rate of 5.38 million units last month. May’s sales pace was revised down to 5.41 million units from the previously reported 5.43 million units.
Economists polled by Reuters had forecast existing home sales gaining 0.5 percent to a rate of 5.44 million units in June. Sales rose in the Northeast and Midwest, but fell in the West and populous South.
Existing home sales, which make up about 90 percent of U.S. home sales, fell 2.2 percent from a year ago in June. They have dropped on a year-over-year basis for four consecutive months and declined 2.2 percent in the first half of 2018. Sales are being stymied by an acute shortages of homes on the market.
Rising building materials costs as well as shortages of land and labor have left builders unable to bridge the inventory gap, pushing up house prices. Supply constraints have largely accounted for the sluggish housing market but there are growing concerns that the higher house prices together with rising mortgage rates will slow down demand.
Supply has been especially tight at the lower end of the market, which accounts for a large portion of the housing market. There were 1.95 million previously-owned homes on the market in June, up 4.3 percent from May.
Inventory increased 0.5 percent in June from a year ago. That was the first year-on-year increase since June 2015. Supply still remains very tight.
At June’s sales pace, it would take 4.3 months to exhaust the current inventory, up from 4.1 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
The median house price increased 5.2 percent from a year ago to an all-time high of $276,900 in June. That was the 76th consecutive month of year-on-year price gains.