ARLINGTON, Va.—Existing home sales declined 1.8% in June to a seasonally adjusted annual rate of 5.52 million.
Despite the decreased sales, NAFCU Research Assistant Yun Cohen says the housing outlook remains positive due to a strong labor market and improving rates of household formation.
The sales data, released Monday, shows there were 4.3 months of supply at the end of June, up from 4.2 months in May. Analysts consider six months of supply to be roughly balanced between supply and demand. Inventory decreased 0.5% in June and was down 7.1% from a year ago. Inventory has declined year-over-year for 25 consecutive months, NAFCU reported.
"Despite robust demand, inventory remains persistently low and continues to constrain sales," Cohen wrote in a Macro Data Flash. "As a result of the tight market, a typical home was sold after being on the market for merely 28 days. (National Association of Realtors) announced recently that foreign buyers are contributing to the surge in demand, having accounted for 10% of sales this year, as compared to 8% in the prior year.
"In spite of the supply constraints and affordability concerns, the outlook for housing remains positive overall in light of a strong labor market and improving rates of household formation," Cohen added.
The median existing home price increased from $252,500 in May to $263,800, non-seasonally adjusted in June—the highest on record. This is 6.5% higher than the median price from a year ago. June marks the 64th consecutive month of year-over-year price increases, Cohen noted.