Sales of previously owned U.S. homes unexpectedly declined in June to an eight-month low, showing the recovery in residential real estate will take time to develop.
Purchases decreased 5.4 percent to a 4.37 million annual rate last month from a revised 4.62 million in May, figures from the National Association of Realtors showed Thursday in Washington. The median forecast of economists surveyed by Bloomberg News called for a 4.62 million pace.
Slower job growth, stricter lending standards and competition from cheaper distressed properties may be impeding the market even with mortgage rates at all-time lows. The drop in home values since the last recession has also left some homeowners owing more than their property is worth, limiting their ability to relocate.
“It’s difficult for people to sell their homes when they’re underwater,” Christopher Low, chief economist for FTN Financial in New York, said before the report. “The trend since the bottom in mid-2010 has been generally upward, it’s just a very slow recovery.”
Estimates in the Bloomberg survey of 76 economists ranged from 4.42 million to 4.75 million after a previously reported 4.55 million rate in May.
Stocks trimmed gains after the figures. The Standard & Poor’s 500 Index climbed 0.1 percent to 1,374.03 in New York, after rising as much as 0.4 percent.
Federal Reserve Chairman Ben S. Bernanke told lawmakers this week that the recovery is housing has been slow to develop. Growth in construction and “historically low mortgage rates” are among “modest signs” of a housing recovery, even as some buyers show concern about personal finances and the broader economy and have difficulty meeting lending standards, Bernanke told the Senate Banking Committee.
Another report today showed more Americans than forecast filed applications for unemployment benefits last week as the volatility induced by the annual auto-plant retooling shutdowns wore off.
Applications for jobless benefits increased by 34,000 to 386,000 in the week ended July 14, Labor Department figures showed today. The volatility in the numbers was due to a change in the timing of annual automobile plant layoffs, a Labor Department spokesman said as the data were released.
Existing-home sales, which are tabulated when a contract closes, have strengthened since reaching a low of 3.39 million at an annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.
The median price of an existing home increased 7.9 percent from June 2011 to $189,400, today’s report showed. The pickup reflects an increase in the purchase of higher-priced properties, according to Lawrence Yun, chief economist of the Realtors group.