Sales of existing homes to first-time buyers fell in July to their lowest share since January, even as overall sales increased for the third consecutive month, the National Association of Realtors reported on Thursday.
Total July existing-home sales remained at their highest pace since February 2007 and increased by 2% over June. The number of existing-home sales increased year-over-year for the 10th consecutive month.
At the same time, the median price of an existing home, including single-family houses, townhomes, condos and co-ops, ticked up 5.6% over July 2014, to $234,000, the NAR reported. July’s price increase was the 41st consecutive month of year-over-year gains.
Brisk sales have a downside: In a market with a low inventory of homes for sale, a buying spree leaves too few homes available for buyers to choose from.
Combined with rising prices, low inventory levels tend to push first-time buyers out of the market because they are unable to find homes at prices they can afford.
In fact, the inventory of existing homes available for sale declined by the end of July by 0.4%, to 2.24 million — down 4.7% from a year ago. That left a 4.8-month supply of unsold inventory and contributed to a decline of the first-time buyers’ share of existing-home home purchases to 28%, compared with 29% at this time last year.
“Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand,” NAR Chief Economist Lawrence Yun said in a press release. Already, he said, some real estate agents have reported slower foot traffic because of low inventory and concerns about rising home prices without a corresponding increase in incomes.