WASHINGTON (Reuters) - U.S. existing home sales dropped to a five month-low in June, depressed by a chronic shortage of houses on the market that slowed the pace of decline in annual house prices.
Existing home sales fell 3.3% in June to a seasonally adjusted annual rate of 4.16 million units, the lowest level since January, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home sales would drop to a rate of 4.20 million units.
Sales rose in the Northeast and were unchanged in the Midwest. They fell in the West and the densely populated South.
Home resales, which account for a big chunk of U.S. housing sales, plunged 18.9% on a year-on-year basis in June.
Though data ranging from building permits to homebuilder sentiment suggest the housing market has bottomed out after being pushed into recession by the Federal Reserve's aggressive interest rate hikes, the persistent shortage of homes for sale could limit any rebound.
With the average rate on the popular 30-year fixed mortgage just under 7%, according to data from mortgage finance agency Freddie Mac (OTC:FMCC), many homeowners are remaining in their homes for longer, contributing to the tight supply.
Though builders are ramping up production, they are being hampered by shortages of materials like electrical transformer equipment. Higher borrowing costs and land shortages are also constraints.
There were 1.08 million previously owned homes on the market last month, down 13.6% from a year ago. At June's sales pace, it would take 3.1 months to exhaust the current inventory of existing homes, up from 2.9 months a year ago.
A four-to-seven-month supply is viewed as a healthy balance between supply and demand. The median existing house price fell 0.9% from a year earlier to $410,200, the second-highest price ever. The median house price rose 3.5% from May.
"Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month," said Lawrence Yun, the NAR's chief economist.
Properties typically remained on the market for 18 days in June, up from 14 days a year ago. Seventy-six percent of homes sold in June were on the market for less than a month. First-time buyers accounted for 27% of sales, down from 30% a year ago.
All-cash sales accounted for 26% of transactions compared to 25% a year ago. Distressed sales, including foreclosures, represented 2% of transactions, which was unchanged from May.