© Reuters. FILE PHOTO: A sign reading “For Sale” is posted in front of a residential building in the Queen Anne neighborhood of Seattle, Washington, United States, May 14, 2021. REUTERS / Karen Ducey / File Photo
WASHINGTON (Reuters) – US home sales rebounded in June after four straight declines a month, but the pace has been moderate as higher prices and low inventories remain constrained.
Existing home sales rose 1.4% last month to a seasonally adjusted annual rate of 5.86 million units, the National Association of Realtors said Thursday. Sales increased in the Northeast, West and Midwest. In the densely populated south they remained unchanged.
Economists polled by Reuters had forecast that June sales would rise to 5.90 million units.
Home sales, which make up the bulk of US home sales, rose 22.9% year over year.
The COVID-19 pandemic fueled demand for homes as millions of Americans switched to remote working and schooling.
Supply was scarce even before the pandemic and is unlikely to improve as builders grapple with higher costs for raw materials, including wood and concrete. Labor and building land are also scarce. The Commerce Department reported Tuesday that future housing permits fell to an eight-month low in June.
Realtors, home builders and a group of other stakeholders met with White House officials including Commerce Secretary Gina Raimondo and Housing and Urban Development Secretary Marcia Fudge last Friday to discuss strategies to address short-term supply chain disruptions in the housing sector.
The average price of existing homes rose 23.4% year over year to $ 363,300 in June. The higher prices are partly due to the concentration of sales in the upper market segment. Bid wars have become the norm across the country, although the NAR said the number of multiple bids is decreasing.
Last month there were 1.25 million condos on the market, 18.8% fewer than a year ago. At June sales pace, it would take 2.6 months to run out of current inventory, up from 3.9 months last year.
A supply of six to seven months is considered a healthy balance between supply and demand. Economists don’t believe another housing bubble is developing and note that the spike is mainly caused by a mismatch between supply and demand, rather than poor lending practices that sparked the 2008 global financial crisis.
However, higher home prices could dampen demand. The University of Michigan consumer survey, released last week, showed consumer complaints about rising house prices remained at an all-time high in early July.
Properties typically stayed on the market for 17 days in June, hitting the all-time low seen in May. Eighty-nine percent of homes sold last month had been on the market for less than a month.
First-time buyers accounted for 31% of sales in June, up from 35% the previous year.
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