Another Post-Crisis Peak for Existing Home Sales

by devteam August 20th, 2015 | Share

While first-time buyers fell back,rnexisting home sales scored their third consecutive monthly gain in July.  The National Association of Realtors® (NAR)rnreports that completed sales of pre-owned single-family homes, townhomes, condominiums,rnand coops were up 2.0 percent from June to a seasonally adjusted annual rate ofrn5.59 million units.  June’s sales figuresrnwere revised down from 5.49 million units to 5.48 million.  Stubbornly low inventory levels and risingrnprices were blamed in the existing home sales report for a share of first timernbuyers that was the lowest since January.</p

The July numbers again set a post-crisisrnpeak, the fastest rate of sales since 5.79 million units in February 2007.  Sales of existing homes have increasedrnyear-over-year for ten consecutive months and are 10.3 percent higher than thernJuly 2014 level of 5.07 million.</p

Sales of single-family houses increasedrn2.7 percent to a seasonally adjusted annual rate of 4.96 million in Julyrn(highest since February 2007 at 5.08 million) from 4.83 million in June, andrnare now 11.0 percent above the 4.47 million pace a year ago. Existingrncondominium and co-op sales dipped 3.1 percent to a seasonally adjusted annualrnrate of 630,000 units from 650,000  inrnJune, but are still up 5.0 percent from July 2014’s 600,000 units. </p

Lawrence Yun, NAR chief economist, saysrnthe increase in sales in July solidifies what has been an impressive growth inrnactivity during this year’s peak buying season. “The creation of jobsrnadded at a steady clip and the prospect of higher mortgage rates and homernprices down the road is encouraging more households to buy now,” he said. “Asrna result, current homeowners are using their increasing housing equity towardsrnthe downpayment on their next purchase.”</p

The median price for all existing homerntypes sold in July was $234,000, a 5.6 percent annual increase and the 41st</supconsecutive month of year-over-year gains. rnThe median price of a single-family home was up 5.8 percent from Julyrn2014 to $235,500 and condos sold for a median of $221,800, a 3.2 percent gain.</p

“Despite the strong growth inrnsales since this spring, declining affordability could begin to slowly dampenrndemand,” adds Yun. “Realtors® in some markets reported slower footrntraffic in July in part because of low inventory and concerns about therncontinued rise in home prices without commensurate income gains.”</p

Total housing inventory at the end ofrnJuly declined 0.4 percent to 2.24 million existing homes, 4.7 percent lowerrnthan a year ago (2.35 million).  Thisrnrepresents a 4.8-month supply of homes for sale at the current sales pace, downrnfrom 4.9 months in June. </p

The percent share of first-time buyersrndeclined in July for the second consecutive month, falling from 30 percent inrnJune back to the January level of 28 percent. A year ago, first-time buyersrnrepresented 29 percent of all buyers. </p

“The fact that first-time buyersrnrepresented a lower share of the market compared to a year ago even thoughrnsales are considerably higher is indicative of the challenges many young adultsrncontinue to face,” adds Yun. “Rising rents and flat wage growth makernit difficult for many to save for a downpayment, and the dearth of supply inrnaffordable price ranges is limiting their options.”</p

Thirteen percent of sales were torninvestors, up 1 percentage point from June but down 3 points from a yearrnearlier.  All-cash sales increasedrnslightly to 23 percent from 22 percent of transactions as 64 percent ofrninvestors bought with cash during the month. rn</p

Distressed sales declined to a 7rnpercent share in July compared to 8 percent in June and 9 percent in Julyrn2014.  It was the lowest share ofrndistressed sales since NAR began tracking those numbers in October 2008.  Five percent July sales were foreclosuresrnwhich sold with an average discount of 17 percent and 2 percent were shortrnsales, discounted an average of 12 percent. </p

Marketing time rose from a typical 34rndays in June to 42 days but still improved from the 48 days on the market arnyear earlier.  Short sales were, asrnusual, on the market the longest at a median of 135 days in July, whilernforeclosures sold in 49 days and non-distressed homes took 41 days. Forty-threernpercent of homes sold in July were on the market for less than a month.</p

NAR President Chris Polychron says thernhousing market is in a much better place and has come a long way since therndepths of the recession. “Five years ago, distressed sales represented 33rnpercent of the market in July,” he said. “For many previouslyrndistressed homeowners throughout the country, rising home values in recentrnyears have helped recover equity and the vast improvement in several local jobrnmarkets means fewer are falling behind on their mortgage payments.”</p

Existing-home sales in the Northeastrndecreased 2.8 percent to an annual rate of 700,000, but are still 9.4 percentrnabove a year ago. The median price in the Northeast was $277,200, 1.3 percentrnhigher than the previous July.  In thernMidwest the pace of annual ales was 1.32 million, unchanged from June and 10.9rnpercent above a year earlier. The median price rose 6.6 percent to $186,500.</p

The South saw a 4.1 percent increase inrnexisting home sales to 2.29 million in July and a 9.6 percent year-over-yearrngain.  The median price rose 7.0 percentrnto $203,500.  Sales in the West rose 3.2rnpercent to an annual rate of 1.28 million in July, and are 11.3 percent above arnyear ago. The median price in the West was $327,400, an 8.4 percent gain.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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