Home Sales up 6.5 Percent; Prices Nearing Pre-Crash Peak
Sales of existing home increased strongly in July and median home prices are now nearing their pre-crash peak National Association of Realtors® (NAR) said today. Sales in July rose to a seasonally adjusted annual rate of 5.39 million units. This represented an increase of 6.5 percent from the revised (from 5.08 million) estimate for June of 5.06 million. The July figure was 17.2 percent above the level of sales in July 2012 and July was the 25th month in which existing sales were up from those of the previous year. Existing home sales are completed transactions that include single-family houses, townhomes, condominiums and coops.
Sales of single family homes were at an annual rate of 4.76 million compared to 4.48 million in June, a 6.3 percent increase and were 16.4 percent higher than a year earlier. Sales of existing condominiums and coops increased 8.6 percent from June and 23.5 percent on an annual basis to a pace of 630,000 units.
The median price for an existing home was $213,500 in July, a 13.7 percent increase from July 2012 and the 17th consecutive month that prices have risen on an annual basis. For the last eight months the median price has increased by double digits and is now 7.3 percent below the all-time peak of $230,000 in July 2006. Two years ago the median price was off 25.7 from that peak. The median existing single-family home price was $214,000 in July, up 13.5 percent from a year ago and the median existing condo price was $209,600 in July, an annual increase of 15.5 percent.
Lawrence Yun, NAR chief economist, said changes in affordability are impacting the market. "Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," he said. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."
Despite higher mortgage interest rates, Yun identified compensating factors that can sustain a continued recovery. "Although housing affordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall."
Existing housing inventory rose 5.6 percent at the end of July with 2.28 million homes available for sale. This represents a 5.1 month supply at the current rate of sales, unchanged from June. Listed inventory is 5.0 percent below a year ago, when there was a 6.3-month supply. "Tight inventory in many areas means above-normal price growth for the foreseeable future," Yun said.
Foreclosures accounted for 9 percent of July sales and short sales for 6 percent. The distressed sales aggregate of 15 percent was the same as in June and tied for the lowest share since monthly tracking began in October 2008. NAR said continuing declines in the share of these sales account for some of the price gains.
Marketing time increased slightly in July to 42 days from 37 days in June but is 39 percent below the median time on market of 69 days in July 2012. It took 72 days for a short sale, 50 for a foreclosure and 40 for a.non-distressed sale to close. Forty-five percent of homes that sold in July were on the market for less than a month.
First-time buyers accounted for 29 percent of purchases in July, unchanged from June, but are down from 34 percent in July 2012. All-cash sales comprised 31 percent of transactions in July, also unchanged from June but up 4 basis points from a year earlier. Individual investors, who account for many cash sales, purchased 16 percent of homes in July, down from 17 percent in June; they reached a cyclical peak of 22 percent in February of this year.
NAR President Gary Thomas said, "The overall percentage of cash purchases has been fairly steady, as has the share of first-time buyers, but the investor share has been trending down since February. This means more repeat buyers are using cash in this tight-credit environment. With a steady decline in lower priced inventory, particularly in foreclosures, investors are finding fewer bargains to buy," he said.
Regionally, existing-home sales in the Northeast surged 12.7 percent to an annual rate of 710,000 in July and are 20.3 percent above July 2012. The median price in the Northeast was $271,200, up 6.7 percent from a year ago.
Existing-home sales in the Midwest rose 5.8 percent in July to a pace of 1.28 million, and are 20.8 percent higher than a year ago. The median price in the Midwest was $168,300, which is 9.5 percent above July 2012.
In the South, existing-home sales increased 5.0 percent to an annual level of 2.11 million in July and are 16.6 percent above July 2012. The median price in the South was $183,400, up 13.6 percent from a year ago.
Existing-home sales in the West rose 6.6 percent to a pace of 1.29 million in July and are 13.2 percent higher than a year ago. The median price in the West, driven the most by a supply imbalance, was $287,500, which is 19.2 percent above July 2012.