Home Sales up 6.5 Percent; Prices Nearing Pre-Crash Peak

Sales of existing home increasedrnstrongly in July and median home prices are now nearing their pre-crash peak NationalrnAssociation of Realtors® (NAR) said today. rnSales in July rose to a seasonally adjusted annual rate of 5.39 millionrnunits.  This represented an increase ofrn6.5 percent from the revised (from 5.08 million) estimate for June of 5.06rnmillion.  The July figure was 17.2rnpercent above the level of sales in July 2012 and July was the 25^{th</supmonth in which existing sales were up from those of the previous year.  Existing home sales are completedrntransactions that include single-family houses, townhomes, condominiums andrncoops.</p}

Sales of single family homes were at anrnannual rate of 4.76 million compared to 4.48 million in June, a 6.3 percentrnincrease and were 16.4 percent higher than a year earlier.  Sales of existing condominiums and coopsrnincreased 8.6 percent from June and 23.5 percent on an annual basis to a pacernof 630,000 units. </p

The median price for an existing home was $213,500 in July, a 13.7 percentrnincrease from July 2012 and the 17^th consecutive month that pricesrnhave risen on an annual basis. For the last eight months the median price hasrnincreased by double digits and is now 7.3 percent below the all-time peak ofrn$230,000 in July 2006.  Two years ago thernmedian price was off 25.7 from that peak.  The median existing single-family home pricernwas $214,000 in July, up 13.5 percent from a year ago and the median existingrncondo price was $209,600 in July, an annual increase of 15.5 percent. </p

Lawrence Yun, NAR chief economist, said changes in affordability arernimpacting the market.  “Mortgage interest rates are at the highest levelrnin two years, pushing some buyers off the sidelines,” he said.  “Therninitial rise in interest rates provided strong incentive for closingrndeals.  However, further rate increases will diminish the pool of eligiblernbuyers.”</p

Despite higher mortgage interest rates, Yun identified compensating factorsrnthat can sustain a continued recovery.  “Although housing affordabilityrnconditions will become less attractive, jobs are being added to the economy,rnand mortgage underwriting standards should normalize over time from currentrnstringent conditions as default rates fall.”</p

Existing housing inventory rose 5.6 percent at the end of July with 2.28rnmillion homes available for sale.  Thisrnrepresents a 5.1 month supply at the current rate of sales, unchanged fromrnJune.  Listed inventory is 5.0 percentrnbelow a year ago, when there was a 6.3-month supply.  “Tight inventory inrnmany areas means above-normal price growth for the foreseeable future,” Yunrnsaid.</p

Foreclosures accounted for 9 percent of July sales and short sales for 6rnpercent.  The distressed sales aggregaternof 15 percent was the same as in June and tied for the lowest share sincernmonthly tracking began in October 2008. rnNAR said continuing declines in the share of these sales account forrnsome of the price gains.</p

Marketing time increased slightly in July to 42 days from 37 days in Junernbut 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 arnforeclosure and 40 for a.non-distressed sale to close.  Forty-five percent of homes that sold in Julyrnwere on the market for less than a month.</p

First-time buyers accounted for 29 percent of purchases in July, unchangedrnfrom June, but are down from 34 percent in July 2012. All-cash sales comprisedrn31 percent of transactions in July, also unchanged from June but up 4 basisrnpoints from a year earlier. Individual investors, who account for many cashrnsales, purchased 16 percent of homes in July, down from 17 percent in June;rnthey reached a cyclical peak of 22 percent in February of this year.</p

NAR President Gary Thomasrnsaid, “The overall percentage of cash purchases has been fairly steady, as hasrnthe share of first-time buyers, but the investor share has been trending downrnsince February.  This means more repeat buyers are using cash in thisrntight-credit environment.  With a steadyrndecline in lower priced inventory, particularly in foreclosures, investors arernfinding fewer bargains to buy,” he said.</p

Regionally, existing-home sales in the Northeast surged 12.7 percent to anrnannual rate of 710,000 in July and are 20.3 percent above July 2012.  Thernmedian price in the Northeast was $271,200, up 6.7 percent from a year ago.</p

Existing-home sales in the Midwest rose 5.8 percent in July to a pace ofrn1.28 million, and are 20.8 percent higher than a year ago.  The medianrnprice in the Midwest was $168,300, which is 9.5 percent above July 2012.</p

In the South, existing-home sales increased 5.0 percent to an annual levelrnof 2.11 million in July and are 16.6 percent above July 2012.  The medianrnprice in the South was $183,400, up 13.6 percent from a year ago.</p

Existing-home sales in the West rose 6.6 percent to a pace of 1.29 millionrnin July and are 13.2 percent higher than a year ago.  The median price inrnthe West, driven the most by a supply imbalance, was $287,500, which is 19.2rnpercent above July 2012.

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