Highest Home Sales Since 2005 May be Temporary Peak

Existing home sales reached a six-and-arnhalf year peak in August, increasing 1.7 percent to a seasonally adjustedrnannual rate of 5.48 million units compared to 5.39 million in July. The salesrnwere 13.2 percent higher than one year earlier when sales were at the rate ofrn4.84 million units.    Howeverrnthe National Association of Realtors® (NAR) in releasing the figures said therngrowth in sales may have peaked.  Indeedrnthe August increase did moderate from that reported in July when sales grew 6.5rnpercent over June and were up 17.2 percent year-over-year. </p

NAR said sales of existing homes havernnot been at such a high level since February 2007 when transactions hit a 5.79rnmillion pace.  Existing home sales,rnincluding those of single family homes, townhomes, condominiums and coops, havernremained above their year-ago levels for the past 26 months.</p

Single-family home sales rose also rose 1.7 percent to a seasonally adjustedrnannual rate of 4.84 million in August from 4.76 million in July.  This is 12.8 percent above the 4.29rnmillion-unit pace in August 2012.  Existing condominium and co-op salesrnwere up 1.6 percent to an annual rate of 640,000 units from 630,000 in July,rnand are 16.4 percent above the 550,000-unit level a year ago. </p

Lawrence Yun, NAR chief economist, said the market may be experiencing a<btemporary peak.  “Rising mortgage interest rates pushed more buyers tornclose deals, but monthly sales are likely to be uneven in the months ahead fromrnseveral market frictions,” he said.  “Tight inventory is limiting choicesrnin many areas, higher mortgage interest rates mean affordability isn’t asrnfavorable as it was, and restrictive mortgage lending standards are keepingrnsome otherwise qualified buyers from completing a purchase.”</p

Home prices continued to climb, withrnmedian prices rising over those of the previous year for the 18th consecutivernmonth and rising by double digits for the ninth. The national median price forrnall housing types was $212,100 in August, up 14.7 percent from August 2012.  This was the largest year-over-year pricerngain since October 2005.  The medianrnexisting single-family home price was $212,200 in August, which is 14.4 percentrnhigher than a year ago and the condo price was $211,700, a 17.7 percent annualrnincrease.  </p

The total housing inventory increased 0.4 percent from July to 2.25 millionrnexisting homes, a 4.9 month supply at the current sales rate.  Unsold inventory is 6.3 percent below a yearrnago, when there was a 6.0-month supply.  “Limited inventory in some areasrnmeans multiple bidding remains a factor; 17 percent of all homes sold above thernasking price in August, although 63 percent sold below list price,” Yun said.</p

The median time on market for all homes was 43 days in August, one day lessrnthan in July but substantially faster than the 70 days required to sell a homernin August 2012.  The median forrnnon-distressed sales was 41 days while short sales and foreclosure sales tookrn98 days and 52 days respectively.  Forty-threernpercent of homes sold during the month were on the market for less than arnmonth.</p

Distressed homes, foreclosures and short sales, accounted for 12 percent ofrnAugust sales – 8 percent foreclosures and 4 percent short sales – down from 15rnpercent in July, and the lowest share since monthly tracking began in Octoberrn2008 and 12 percentage points lower than one year earlier.  Foreclosures sold for an average discount ofrn16 percent below market value and short sales were discounted 12 percent.  NAR said the decline in distressed sales isrnin part responsible for the median price increases.  </p

NAR President Gary Thomas said rising home values will encourage more peoplernto sell.  “As the equity position of most homeowners continues to improve,rnsome who have been on the sidelines will list their home for sale.  Most of those owners also will be buyingrnanother home, but higher levels of new home construction going into 2014,rncombined with some reduction in demand from less favorable affordabilityrnconditions, will help to moderate price growth to more sustainable levels.”</p

First-time buyers accounted for 28 percent of purchases in August and investorsrnbought 17 percent of homes.  Both figuresrnare about the same as in July as was the 31 percent of sales that were all cash.</p

Existing-home sales in the Northeast were unchanged at an annual rate ofrn710,000 in August but were up 12.7 percent from August 2012.  The medianrnprice in the Northeast was $268,800, up 7.6 percent from a year ago.</p

Sales in the Midwest increased 3.1 percent in August to a pace of 1.32rnmillion, 18.9 percent higher than a year ago.  The median price in thernMidwest was $166,100, 10.0 percent above August 2012.</p

In the South, existing-home sales rose 3.8 percent to an annual level ofrn2.19 million and registered an annual increase of 13.5 percent.  The median price in the South was $181,000, 14.6rnpercent higher than a year ago.</p

Existing-home sales in the West declined 2.3 percent to a pace of 1.26rnmillion in August but are 7.7 percent higher than a year ago.  With therntightest regional inventory conditions, the median price in the West rose torn$287,500, which is 18.8 percent above August 2012.

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