Existing-Home Sales Improve in July, Prices Continue to Rise

Sales of existing homes rose in July even with constraints of affordable inventory, and the national median price is showing five consecutive months of year-over-year increases, according to the National Association of Realtors®.  Monthly sales rose in every region but the West, where inventory is very tight.

Total existing-home sales1, which are completed transactions that include single-family homes, town-homes, condominiums and co-ops, grew 2.3 percent to a seasonally adjusted annual rate of 4.47 million in July from 4.37 million in June, and are 10.4 percent above the 4.05 million-unit pace in July 2011.

Lawrence Yun, NAR chief economist, said housing affordability conditions are very good.  “Mortgage interest rates have been at record lows this year while rents have been rising at faster rates.  Combined, these factors are helping to unleash a pent-up demand,” he said.  “However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”

NAR is asking the government to expeditiously release the foreclosed properties it owns in inventory-constrained markets.

Given population and demographic demand, Yun said existing-home sales could be in a normal range of 5 to 5.5 million if all conditions were optimal.  “Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that,” he said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.55 percent in July from 3.68 percent in June; the rate was 4.55 percent in July 2011; recordkeeping began in 1971.

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 24 percent of July sales (12 percent were foreclosures and 12 percent were short sales), down from 25 percent in June and 29 percent in July 2011.

Foreclosures sold for an average discount of 17 percent below market value in July, while short sales were discounted 15 percent.

“Fully one-third of homes purchased in July were on the market for less than a month, and only 21 percent were on the market for six months or longer.  Sellers should carefully consider a Realtor’s ® advice about marketing their homes,” Veissi said.

First-time buyers accounted for 34 percent of purchasers in July, up from 32 percent in June; they were also 32 percent in July 2011.  Under normal conditions, entry-level buyers account for four out of 10 purchases.

Existing-home sales in the Northeast rose about 7.4 percent. The median price in the Northeast was $254,200.

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