Low inventory, shortages of land and labor, and high costs of lumber hurt home sales and construction in June.
Sales of existing homes fell 0.6 percent from May to an annual rate of 5.38 million units, the National Association of REALTORS® reported. Inventory of homes for sale on the market was at a 4.3-month supply, well below the 6-month supply seen as normal. Lawrence Yun, NAR chief economist, said, "The root cause is without a doubt the severe housing shortage."
New Home Sales also declined in June, hitting their lowest level since October 2017. Sales fell 5.3 percent from May to an annual rate of 631,000, the Commerce Department reported. Inventory of new homes for sale fared better than inventory of existing homes in June, with a 5.7-month supply of new homes available.
June Housing Starts, which measure when excavation begins on a home, also reached their lowest level since September 2017. Starts fell 12.3 percent from May to an annual rate of 1.173 million units, and they declined in all four major regions of the country. Starts were down 4.2 percent from June of last year.
Building Permits, a sign of future construction, fell 2.2 percent in June from May to an annual rate of 1.273 million. Building Permits were down 3 percent from a year ago.
Strong Second Quarter GDP
Economic growth surged in the second quarter of 2018 due in part to a big rise in consumer spending. The Bureau of Economic Analysis reported that Gross Domestic Product (GDP) rose 4.1 percent from the 2.2 percent recorded in the first quarter. The report also showed that consumer spending jumped 4 percent in the second quarter from the dismal 0.5 percent in the first quarter. GDP is considered the broadest measure of economic activity.
At this time, home loan rates remain near historic lows.