May 7, 2021

Home Sales Fall 0.8%; 3rd Drop in 3 Months

The National Association of Realtors said home sales fell 0.8 percent last month to a seasonally adjusted annual rate of 4.77 million homes. That is far below the six million homes a year rate that economists say represents a healthy housing market.

June’s decrease was the third consecutive monthly decline in home sales.

Through the first six months of 2011, the number of sales is behind last year’s 4.91 million homes sold — the weakest sales in 13 years. Sales have fallen in four of the last five years.

The association said a record number of people who signed contracts canceled their deals last month. And first-time buyers are becoming a smaller share of the market.

Sales of single-family homes held steady in June, while sales of condominiums declined 7 percent.

Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes are deterring many would-be buyers. Even some people with good credit and enough money for a down payment are delaying because they are worried that prices will keep falling.

“It all goes back to uncertainty about the future and hiring,” said Jennifer Lee, senior economist at BMO Capital Markets.

First-time buyers made up just 31 percent of sales in June, when normally they make up about half of all home sales. First-time buyers are valuable in the housing market because they tend to keep their homes for years and because their purchases allow sellers to move to more expensive homes.

About 16 percent of home deals were canceled last month, four times the number in May and the highest level since such record keeping began more than a year ago. A sale is not final until a mortgage is closed.

The median sales price rose nearly 9 percent in June from May, to $184,300. The increase was mainly a result of seasonal factors that led to a big increase in prices in the Northeast and West.

Sales were uneven across the country. In May, sales rose 0.5 percent in the West and 1 percent in the Midwest and fell 1.7 percent in the South and 5.2 percent in the Northeast.

The supply of unsold homes rose slightly in June to 3.77 million. At last month’s sales pace, it would take 9.5 months to sell those homes.

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