The National Association of Realtors (NAR) reported this morning that existing home sales fell by -5.4% to a seasonally adjusted annual rate of 4.62 million units in May to 4.37 million units in June. Year-over-year, however, sales rose 4.5% compared with June 2011.

The NAR’s chief economist said:

Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets. The price improvement also results from fewer distressed homes in the sales mix.

First-time buyers comprised 32% of June buyers, down from 34% in May and up from 31% in June of 2011. The NAR believes a “healthy” share of first-time buyers is about 40%, and blames “tight inventory in the lower price ranges, along with unnecessarily tight credit standards” for the shortfall.

Total housing inventory stood at 2.39 million existing homes at the end of June, down -3.2% from May. The total represents a 6.6-month supply at the pace of sales. Last June the inventory stood at a 9.1-month supply.

The tight market for existing homes could be one reason that homebuilders, particularly those with their own financing operations, are seeing orders rise and sales pick up, especially in the lower-priced market.

While the NAR’s figures on sales are important — especially to the group’s member realtors — the inventory numbers are probably more important as a measure of where the market is headed. Right now, it is headed in the right direction.

Paul Ausick

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