Fewer people bought previously occupied homes in June, putting this year on pace to be the worst for sales since the housing bust.
Home sales fell 0.8 percent last month to a seasonally adjusted annual rate of 4.77 million homes, the National Association of Realtors said Wednesday. That's far below the 6 million homes per year that economists say represents a healthy housing market.
June's decrease was the third straight monthly decline in sales. Through the first six months of this year, the sales pace is behind last year's 4.91 million homes sold — the weakest sales in 13 years. Sales have fallen in four of the past five years.
The Realtors' group said a record number of people who signed contracts canceled deals last month. And first-time buyers fell to a smaller share of the market.
Single-family home sales held steady in June. But condo sales plunged 7 percent.
Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes are keeping many would-be buyers away. Even some with good credit and enough money for a down payment are holding off because they are worried home prices will keep falling.
The weaker housing market has kept many people from selling their homes and taking new jobs in growing areas. At the same time, the slowdown in hiring has made many cautious about taking on debt.
"It all goes back to uncertainty about the future and hiring," said Jennifer Lee, senior economist at BMO Capital Markets.
First-time homebuyers made up just 31 percent of sales. They normally make up about half of all home sales. First-time buyers are critical to a strong and stable housing market. They tend to keep their homes for years. What's more, their purchases of low and moderately priced homes allow sellers to move up to pricier homes.
Another growing problem: some sales that are under contract and almost finished are falling apart at the last minute. Roughly 16 percent of home deals were canceled last month. That's four times the number in May and the highest level since such records began being kept more than a year ago. A sale isn't final until a mortgage is closed.
Some buyers have canceled purchases after appraisals showed that the homes were worth less than the buyers' initial bids. Millions of foreclosures have made it harder to get accurate appraisals that all parties can agree on.
Foreclosures and short sales — when a lender agrees to sell for less than what is owed on a mortgage — made up about 30 percent of all home sales last month, up from about 10 percent in past years. And a wave of foreclosures are being held up, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.
Investors have targeted foreclosures and other deeply discounted properties. They accounted for 19 percent of sales in June.
The median sales price jumped nearly 9 percent in June from May, to $184,300. It was mainly because of seasonal factors that led to a big increase in prices in the Northeast and West.
Sales were uneven across the country. In May, sales rose 0.5 percent in the West and 1 percent in the Midwest and fell 1.7 percent in the South and 5.2 percent in the Northeast.
The glut of unsold homes rose slightly in June to 3.77 million homes. At last month's sales pace, it would take 9.5 months to clear those homes. Analysts say a healthy supply can be cleared in six months.
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