Fussy buyers and sellers contributed to a setback in the housing market recovery in June.
Existing homes sold at an annual rate of 4.37 million last month, according to National Association of Realtors' (NAR) data released Thursday. That was down 5.4% from 4.62 million in May, but up 4.5% from 12 months earlier.
Sales came in lower than the 4.65 million consensus forecast of a panel of industry experts polled by Briefing.com.
Lawrence Yun, chief economist for NAR, blamed the drop on a lack of suitable homes for sale.
"[B]uyer interest remains solid," he said. "But inventory continues to shrink and that is limiting buying opportunities." The market had been buoyed by low prices and rock-bottom interest rates, making homebuying much more affordable than it was during the housing boom.
Rising home prices have a big impact on market psychology. Buyers are slow to act when prices are falling. Buyers wait, thinking they can get a better deal.
The sales figures don't accurately reflect current market conditions, according to NAR President Moe Veissi. He said there's been a steady growth in buyer interest.
"Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly," he said. "The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices. Nonetheless, incorrectly priced homes will not attract buyers."
Many recent house hunters first looked to buy existing homes and found nothing they liked, according to Glenn Kelman, founder of discount real estate broker Redfin.
The ones on the market include many foreclosures and short sales that may not be in top-notch, move-in condition, a turn-off for some buyers.
Regular sellers, the ones who would ordinarily be putting homes in very good condition on the market, are holding onto to them when they can, said Kelman. They're unwilling to unload them at the current fire-sale prices.
Disappointed buyers have turned to new homes for the product they want.