Something really surprising just happened in the housing market

REUTERS/Robert Galbraith

Existing home sales unexpectedly rose 1.1% to a seasonally adjusted annual rate of 5.57 million in June, according to the National Association of Realtors.

Sales are now up 3.0% from June 2015 (5.41 million), and remain at their highest annual pace since February 2007 (5.79 million).

Economists were expecting sales to fall 0.9% to a seasonally adjusted annual rate of 5.53 million, according to the Bloomberg consensus.

"Sales of existing homes were unexpectedly strong in June, edging up for the fourth consecutive month to a nine-year high and defying expectations for a modest monthly decline. The gain is even more surprising given a continued shortage of homes available for sale, with inventory down almost 6 percent compared to the same time a year ago," Zillow chief economist Svenja Gudell wrote after the data crossed.

"Still, limited inventory and high prices will continue to hamper a full return to a 'normal' market, especially given how good affordability is overall. This one-two punch of few homes for sale and rapidly rising prices is especially likely to impact markets in the west going forward," she added.

"Boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales maintained their upward trajectory in June and increased for the fourth consecutive month," the report noted.

"Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances," said Lawrence Yun, NAR chief economist. "Sustained job growth as well as this year's descent in mortgage rates is undoubtedly driving the appetite for home purchases."

"Looking ahead, it's unclear if this current sales pace can further accelerate as record high stock prices, near-record low mortgage rates and solid job gains face off against a dearth of homes available for sale and lofty home prices that keep advancing," he added.

 

"Though June’s existing home sales numbers show that we’re about 95% back to the pre-recession average, there are many more households in the U.S. looking for homes than in the early 2000s. As such, a lack of supply continues to hold back homebuyers,” added Trulia chief economist Ralph B. McLaughlin.

"The month’s supply of existing homes in June 2016 was the lowest since June 2005. Homebuyers are finding little relief as the housing market recovery marches on," he continued. “A silver lining from tight inventory is that homes are selling faster, which benefits agents and sellers. Existing home sales per agent ticked up to the highest level since June 2015.”

Separately, home prices rose 0.2% month-over-month in May, less than expected, according to the Federal Housing Finance Agency.

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