Americans retreated from buying homes in July as sales sank 1.3 percent to their lowest level of the year.
The National Association of Realtors said Thursday that sales of existing homes slipped 1.3 percent last month to a seasonally adjusted annual rate of 5.44 million. Despite the second straight monthly drop, sales are 2.1 percent higher than a year ago. But purchases are starting to slow as fewer properties are coming onto the market.
The real estate market is grappling with the consequences of a persistent shortage of homes for sale despite strong demand from would-be buyers. The decline in listings has driven up prices and made many homes unaffordable: Prices are rising faster than the wages of potential home buyers despite a solid job market.
The number of existing homes listed for sale has plunged 9 percent over the past 12 months to 1.92 million properties. This steep drop in inventory has led to prices consistently climbing faster than wages.
The median sales price has risen 6.2 percent from a year ago to $258,300, more than double the pace of growth in average hourly earnings.
The lack of homes on the market is also causing properties to sell more quickly. The average number of days on the market was 30 in July, compared with 36 a year ago.
In July, sales plummeted 14.5 percent in the Northeast and fell 5.3 percent in the Midwest. But buying picked up 2.2 percent in the South and 5 percent in the West.
Homeowners are increasingly staying put rather than moving. The average tenure of someone selling their home in July was 8.28 years, according to ATTOM Data Solutions. The real estate data company says that average period of ownership was the highest ever recorded for figures dating to 2000.
California and New England are where homeowners have remained the longest before selling. The average tenure was more than 10 years in Boston, Los Angeles, San Francisco, Seattle and Providence, Rhode Island. Many of these markets are pricy or have experienced major jumps in home values in recent years.
Some financial pressures for would-be homebuyers have been eased as mortgage rates have dropped to their lowest levels since the presidential election.
The average 30-year fixed rate mortgage charged 3.86 percent this week, according to mortgage buyer Freddie Mac. Average rates began to climb after President Donald Trump won the election. But they’ve declined in recent months, in line with Treasury bond yields, as uncertainty has surrounded his tax and infrastructure policies.