US existing home sales unexpectedly fall in June

WASHINGTON, July 9 (Reuters) - U.S. existing home ‌sales unexpectedly fell ​in June ​as house prices hit a record high and mortgage rates remained elevated, pushing potential buyers to the sidelines.

Home sales dropped 2.4% last month to a seasonally adjusted ‌annual rate of 4.09 million units, the National Association of Realtors said on ⁠Thursday. Economists polled by Reuters had forecast home resales would climb to a rate of 4.20 million units.

Sales increased ‌in the Northeast, but declined in ‌the Midwest, South and West.

Existing home sales are counted at the closing of a contract. Last month's sales likely reflected contracts signed in April and May. Though mortgage rates have retreated ​after surging in response to the war in the Middle East, the average rate on the popular 30-year fixed-rate mortgage remains about 45 basis points above its pre-conflict level, data from ⁠mortgage financing firm Freddie Mac showed.

Home sales increased 2.8% on a year-over-year basis in June.

"The back-and-forth in monthly home sales activity, ​driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions," said Lawrence Yun, the NAR's chief economist.

Higher mortgage rates are ​discouraging potential sellers from listing their homes. Many homeowners ‌have mortgages with fixed rates below 5%. The inventory of previously owned homes on the market fell 0.6% to 1.56 million units. Supply increased 1.3% ⁠from a year ago.

There is a national housing shortage, especially for entry-level homes, with the National Association of Home Builders estimating the shortfall at about 1.2 million.

At June's sales pace, it would take 4.6 months to ⁠exhaust the current inventory of existing homes, unchanged from a year ago. The housing shortage is keeping house prices ​elevated.

The U.S. Congress recently passed a bipartisan housing affordability bill, which includes measures to restrict single-family homeownership by investment firms and waive or speed up environmental reviews for construction projects.

President Donald Trump has declined to sign the bill ‌until a separate voting bill is passed.

The median existing home price last month increased 1.8% from a year ago to a record-high $440,600.

First-time buyers accounted for ‌33% of sales, up from 30% a year ago. A 40% share in this category is needed ⁠for a robust housing market.

The median number ‌of days on the market ​for listed properties rose to 28 from 27 a year ago. Distressed sales, including foreclosures, slipped to 2% from 3% last year.

(Reporting by Lucia Mutikani; Editing by ‌Paul Simao)

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