Sales of existing U.S. homes fell in June, according to the National Association of Realtors, as a jump in mortgage interest rates turned off some buyers.
Total sales of existing homes dropped 1.2 percent last month to a seasonally adjusted annual rate of 5.08 million, down from 5.14 million in May. Compared with June 2012, however, sales are up 15.2 percent.
“Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” said NAR chief economist Lawrence Yun in a statement. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market.”
The average interest rate on a 30-year fixed rate mortgage rose to 4.07 percent in June, up dramatically from May’s 3.54 percent average, according to mortgage finance company Freddie Mac.
Meanwhile, the median price for existing U.S. home rose in June to $214,200 from $203,100 in May. It also rose 13.5 percent from the year before. Some of the price growth was created by a falling number of distressed properties on the market. in June only 15 percent of sales were foreclosed homes and short sales, down from 18 percent the previous month.
A shortage of inventory in general is the other half of the price increase equation. Even though total inventory grew by the end of June by 1.9 percent to 2.19 million homes, it still only represents a 5.2-month supply. The NAR considers the market balanced between sellers and buyers when there is a 6-month supply.“Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth,” Yun remarked.