- Existing home sales fell by 1.7% to 5.27 million units (annualized) in June. The headline print came in below market expectations, which called for a milder decline of only 0.4% m/m. On a positive note, sales in the month prior were revised up 0.4% to 5.36 million.
- Both single-family (-1.5% or -70k) and condo/co-op (-3.3% or -20k) fell in the month.
- Activity was mixed across the regions, with existing home sales falling by about 3.5% both in the South (-80k) and West (-40k), while improving by roughly 1.5% in the Northeast (+10k) and Midwest (+20k).
- The number of homes available for sale increased to a seasonally unadjusted 1.93 million units from 1.91 million in May, which is unchanged from a year ago. At the current sales rate, unsold inventory is at a 4.4-month supply, up from 4.3 months in both the month prior and June of last year.
- Median existing home prices in June and in the second quarter as a whole were up 4.3% from year ago levels, which marks a mild acceleration from the 3.8% print in the first quarter. First-time buyers made up 35% of sales in June, up from 32% the month prior and 31% in June last year.
Key Implications
- A soft pending home sales tally in April had already tempered expectations, but the fact that activity still came in well below consensus makes this yet another disappointing housing report.
- Looking past the monthly volatility, the sales trend that has developed in the last several months appears more promising. Contrary to 2018 when activity fell in each of the four quarters, sales are on a more solid path presently, with gains averaging 5% annualized in the first two quarters of 2019. The increased participation of first-time buyers in June marks another light positive touch.
- There is good reason to believe that this trend will continue as demand receives a boost from lower mortgage rates, which have already fallen some 100 basis points since the end of 2018. The supply side however, remains a constraint. With inventory still near historically-low levels, expected gains are likely to remain moderate in nature. In addition, the demand/supply mix is likely to continue providing some support to prices, which accelerated mildly in the second quarter.
