U.S. existing home sales rose by 3.2% m/m to 5.49 million units (annualized) in June. The reading came in above expectations, which called for sales to increase to 5.4 million. Revisions marginally marked down May's tally to 5.32 million from 5.35 million units reported earlier, but most of the gain was preserved. After two months of flat sales, multifamily segment led the way, rising by 6.6% on the month. Meanwhile, the single-family sales rose by a more modest 2.8% m/m to 4.84 million.
"Median home prices increased by 6.5% y/y in June - a deceleration from the 8.0% y/y pace seen in May. This was largely a result of single-family home prices slowing to 6.6% y/y from 8.7% y/y a month earlier. The median price for existing multifamily homes rose by a more subdued but still robust 5.5% y/y", says TD Economics.
The share of distressed sales edged lower to 8%, and was 3 percentage point (pp) lower than year-ago levels. First-time homebuyers accounted for 30% of transactions - down 2pp from the month prior but up 2pp from this time last year.
The inventory of unsold homes - measured in months' supply - edged lower to 5 months (down from 5.1 in May). In terms of the breakdown, the inventory of single family and multifamily homes declined to 5.1 (previously 5.2) and 4.6 (previously 5.0) months, respectively. Sales were up across all four regions, with the Northeast (4.35% m/m) and Midwest (4.7% m/m) leading the way. However, the West (2.3% m/m) and South (2.5% m/m) regions also gained.
TD Economics Notes
- Following lackluster performance in the previous two quarters, existing home sales at last appear to be on a more solid footing. Today's report helped to cement this view, with sales up by 10% relative to the year-ago level. After tallying up the monthly figures, existing home sales rose by 6.6% in the second quarter - the best quarterly performance since the fourth quarter of 2010. This implies a larger contribution from residential investment (mainly through brokers' commissions) to second quarter GDP growth, which is currently tracking around 2.5% (annualized).
- Even more encouraging is the fact that growth in sales is becoming more organic, with gradual but steady rotation towards first time home-buyers and away from investor-driven demand. The share of first time homebuyers remained above the 30% mark for four consecutive months. Meanwhile, sales to investors were down to 12% - a 4pp decline relative to a year ago, while cash sales have declined some 10pp y/y. Rapid increase in the value of dollar alongside considerable price gains in many markets have tempered appetite of both domestic and foreign investors. Meanwhile, a robust labor market, rising rents, improving access to credit and still-high affordability continue to work in favor of homeownership.
- Sales could have been even higher if not for tight inventories. According to National Association of Realtors, properties stayed on the market on average for 34 days - the shortest time since it began tracking the statistic in May 2011.
