Existing Home Sales Back on the Rise as Inventories Improve

Existing homes sales posted the second consecutive increase in July after breaking out of a slump in June that had endured for four months. The National Association of Realtors®, (NAR) said sales of pre-owned single-family houses, town houses, condominiums, and cooperative apartments rose to a seasonally adjusted annual rate of 5.99 million units in July, a 2.0 percent increase from the June rate of 5.87 million and 1.5 percent higher than the pace in July 2020.

Sales of single-family homes rose 2.7 percent month-over-month to a seasonally adjusted annual rate of 5.28 million but were 0.8 percent lower than a year earlier. Condo and co-op sales fell, from a 730,000 rate in June to 710,000 in July, a decline of 2.7 percent. Those sales, however, were 22.4 percent higher year-over-year.

The July results were better than anticipated. The consensus of analysts polled by Econoday, and Trading Economics was for total sales of around 5.83 million, a 0.7 percent decline from the previous report.

NAR chief economist Lawrence Yun said, “We see inventory beginning to tick up, which will lessen the intensity of multiple offers. Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”

The inventory of homes for sale rose by 7.3 percent compared to June but is still down significantly (-12.0 percent) from the prior July. At the end of the reporting period there were 1.32 million homes for sale nationally, an estimated 2.6 month supply at the current sales pace, up from 2.5 months in June. A year earlier there was a 3.1 month supply.

The median existing-home pricehttps://mail.google.com/mail/u/0/#m_-5062774966235753970__edn3 for all housing types sold during the month was $359,900 representing annual appreciation of 17.8 percent. It was the 113 straight month of year-over-year price increases. The median existing single-family home price was $367,000 in July, an 18.6 percent increase. Condo prices grew 14.1 percent to a median of $307,100.

Yun said people should not expect a price drop in coming months, but the rate of appreciation could level off as inventory grows. “In the meantime,” he said, “some prospective buyers who are priced out are raising the demand for rental homes and they are pushing up [those] rates.”

Yun’s prognosis was supported by CoreLogic earlier this month. The company said its Single-Family Rent Index shows rent growth in June was the highest since at least 2005, an annual gain of 7.5 percent. The annual gain in June 2020 was 1.4 percent.

The typical marketing time for homes sold in July was 17 days, unchanged from June but down from 22 days a year earlier. Eighty-nine percent of homes sold in July 2021 were on the market for less than a month.

The percentage of sales to first-time buyes dipped to 30 percent during the month, one point lower than in June. Those buyers had a 34 percent share of sales in July 2020. Individual investors or second-home buyers, who account for many cash sales, purchased 15 percent of homes during the month. All cash sales made up 23 percent of the month’s transactions, unchanged from June but a significant jump from 16 percent a year earlier. Sales of foreclosed and short sales had less than a 1 percent share of the market.

Sales on a regional basis were level with or above their June numbers although only two of the four posted annual gains. Existing-home sales in the Northeast were unchanged from June at an annual rate of 740,000. This was an increase of 12.1 percent from the prior July. The median home price in the Northeast was $411,200, up 23.6 percent from one year ago.

Sales in the Midwest gained 3.8 percent from the June rate to 1.380 million annualized units, down 1.4 percent year-over-year. The median price was $275,300, a 13.1 percent increase from July 2020.

There was a 1.2 percent increase in sales in the South both from June and from July 2020. Sales were at an annual rate of 2.63 million. The median price in the region grew 14.4 percent to $305,200.

The West posted a 3.3 percent increase in sales to an annual rate of 1.240 million units, the same level as a year ago. The median price in the West rose 12.5 percent to $508,300.