US existing homes sales fell in July for the second straight month as high prices and tight supply kept would-be homeowners from signing on the dotted line, industry figures showed Thursday.
The National Association of Realtors said prices continued to rise faster than incomes in much of the United States, with most homes selling in less than a month.
The drop in sales came the same week Commerce Department figures showed sales of new single-family homes also fell in July amid rising prices.
“Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list,” Lawrence Yun, NAR’s chief economist, said in a statement.
Existing home sales, which includes single-family homes, townhouses, condos and co-ops, fell 1.3 percent from the month to a seasonally adjusted annual rate of 5.44 million, confounding analyst expectations which had instead called for a 0.9 percent increase.
The sales pace was 2.1 percent above that recorded in July of last year but the slowest of 2017 so far, NAR said in its monthly report.
The median price rose a stiff 6.2 percent over the median recorded in July 2016 to 258,300 — the 65th straight month of year-on-year price increases.
Ian Shepherdson of Pantheon Macroeconomics said there wasreason to expect a rebound in August, however.
Mortgage demand had increased in the spring and, with single-family home prices up 6.1 percent in the three months ending in July, this meant implied real mortgage rates were in fact below zero.
“That will attract new buyers, provided they can qualify for a mortgage,” he said in a research note.
Inventories fell one percent to a total of 1.92 million existing homes, putting the pool of homes for sale down nine percent below the year-ago level. It has now fallen for 26 consecutive months.
At the current sales rate, this represented a supply of 4.2 months, down from 4.8 months in July of 2016.
Analysts say the current economic recovery, which has seen more than 80 months of uninterrupted job creation, has driven up demand, with a new generation of millennials ready to move into their first homes.
But supply has lagged far behind demand, amid slowing construction and homeowners’ reluctance to sell. Observers blame barriers to homebuilding, such as tight labor, higher input costs and restrictive local regulations, for the slow pace of construction.
Meanwhile, investors who purchased houses following the great recession may be inclined to rent the properties rather than sell before prices peak.