Existing home sales in June boosted by first-time buyers

First-time buyers boosted purchases of existing homes in June, capping off a solid start for the housing sector in the first half of the year.

Sales of previously owned homes, which are completed transactions that include single-family homes and condominiums, rose 1.1 percent to a seasonally adjusted annual rate of 5.57 million last month from 5.51 million in May, the National Association of Realtors said on Thursday.

{mosads}June’s gain was the fourth straight month of sales, which are up 3 percent from June 2015 and remain at their highest annual pace since February 2007 (5.79 million).

“Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” said Lawrence Yun, NAR chief economist.

“Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases,” Yun said.

The share of first-time buyers was 33 percent in June, which is up from 30 percent in May and is the highest since July 2012 (34 percent).

“The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market,” Yu said.

Freddie Mac said the average rate for a 30-year fixed-rate mortgage decreased to 3.57 percent in June from 3.60 percent in May.

The median existing-home price for all housing in June was $247,700, up 4.8 percent from June 2015 ($236,300). 

Still, Yun urged a cautious take on the outlook.

“Looking ahead, it’s unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing,” he said.

Individual investors, who account for many cash sales, purchased 11 percent of homes in June, the lowest since July 2009, shortly after the market crashed.

Total housing inventory at the end of June dipped 0.9 percent to 2.12 million existing homes available for sale with unsold inventory at a 4.6-month supply at the current sales pace, which is down from 4.7 months in May.

Distressed sales — foreclosures and short sales — represented 6 percent of sales in June, unchanged from May and down from 8 percent a year ago.

Single-family home sales increased 0.8 percent to a seasonally adjusted annual rate of 4.92 million in June from 4.88 million in May.

Regionally, only the Northeast saw a decline in June.

In the Midwest, existing-home sales jumped 3.8 percent, sales in the South remained unchanged and sales in the West rose 1.7 percent.

June’s existing-home sales in the Northeast declined 1.3 percent.