Existing Home Sales Rise Despite Tightening Inventories

Salesrnof existing homes increased nationally in July to a seasonally adjusted annualrnrate of 4.47 million units.  This is anrnincrease of 2.3 percent from the 4.37 million rate set in June and 10.4 percentrnhigher than 4.05 million in July 2011.  Thernnational median price of existing homes also rose on an annual basis for thernfifth consecutive month according to data released today by the NationalrnAssociation of Realtors®.  </p

Existingrnhome sales are completed transactions of single-family homes, condominiums,rntownhouses, and cooperative apartments. rnThe increased sales were noted in every region but the West whererninventories are reported to be very tight.</p

Single-family home sales increasedrn2.1 percent to a seasonally adjusted annual rate of 3.98 million in July fromrn3.90 million in June, and are 9.9 percent above the 3.62 million-unit level inrnJuly 2011.  Existing condominium and co-op sales rose 4.3 percent to a seasonallyrnadjusted annual rate of 490,000 in July from 470,000 in June, and are 14.0rnpercent higher than the 430,000-unit pace a year ago.</p

Existing Home Sales</p

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On a non-seasonallyrnadjusted basis there were a total of 429,000 homes sold in July, down fromrn463,000 in June.  Single-family homernsales totaled 378,000 compared to 416,000 a month earlier.</p

The medianrnprice for an existing home sold in July was $187,300, up 9.4 percent fromrn$171,200 a year earlier.  This is thernfirst time there have been five consecutive months with year-over-year price increasesrnsince May 2006.  July’s increase was alsornthe strongest since January 2006 when the median annual increase was 10.2rnpercent.</p

The median existing single-familyrnhome price was $188,100 in July, up 9.6 percent from a year ago.  Thernmedian existing condo price was $180,700 in July, which is 7.7 percent above July 2011.</p

NAR President Moe Veissi said pricing is the primary factor inrndetermining how long homes stay on the market. rn”Fully one-third of homes purchased in July were on the market for less than arnmonth, and only 21 percent were on the market for six months or longer.  “Correctlyrnpriced homes, regardless of price range, are selling quickly these days,”</p

Distressed homes constituted 24rnpercent of the sales in July and were evenly divided between foreclosures andrnshort sales.  This is down slightly fromrn25 percent the previous month and 29 percent a year earlier.  Foreclosures sold for an average discount ofrn17 percent below market value in July, while short sales were discounted 15rnpercent.</p

First-time buyers accounted for 34rnpercent sales in July, up from 32 percent in June; they were also 32 percent inrnJuly 2011.  Under normal conditions, entry-level buyers account for closerrnto 40 percent of the market. </p

All-cash sales slipped to 27 percentrnof transactions in July from 29 percent both in June and in July 2011. rnInvestors, who account for the bulk of cash sales, purchased 16 percent ofrnhomes in July, down from 19 percent in June and 18 percent in July 2011.</p

Lawrence Yun, NARrnchief economist said, “Fewer sales in the lower price ranges are contributingrnto stronger increases in the median price, but all of the home price measuresrnnow are showing positive movement and that is building confidence in thernmarket.  Furthermore, the higher medianrnprice naturally means more housing contribution to economic growth.”</p

Total housing inventory at the endrnJuly increased 1.3 percent to 2.40 million existing homes available for sale, arn6.4-month supply at the current sales pace, down from a 6.5-month supply inrnJune.  Listed inventory is 23.8 percent below a year ago when there was arn9.3-month supply.  However, whilernavailable single-family homes fell 3.1 percent to a 6.3 month supply therninventory of condos for sale rose 8.8 percent to a 7.4 month supply, thernhighest since April.</p

Yun said there are distortions in thisrninventory.  “The total supply of housing inventory appears to be balancedrnin historic terms, but there are notable shortages in the lower price ranges whichrnare limiting opportunities for first-time buyers,” he said.  “The lowrnprice ranges also are popular with investors, so entry-level buyers are at arndisadvantage because many investors are making all-cash offers.”  NAR is asking the government to expeditiouslyrnrelease the foreclosed properties it owns in inventory-constrained markets.</p

Yun said housing affordabilityrnconditions and low rates coupled with faster rising rents are helping to unleashrna pent-up demand.  “However, the market is constrained by unnecessarilyrntight lending standards and shrinking inventory supplies, so housing couldrneasily be much stronger without these abnormal frictions.”  Yun said existing-home sales could be in arnnormal range of 5 to 5.5 million if all conditions were optimal.  “Salesrnmay reach 5 million next year, but it will require more sensible lendingrnstandards and stronger job creation to push beyond that.”</p

Regionally,rnexisting-home sales in the Northeast rose 7.4 percent to an annual level ofrn580,000 in July and are 13.7 percent above July 2011. rnThe median price in the Northeast was $254,200, up 3.5 percent from a year ago.</p

Sales in thernMidwest increased 2.0 percent in July to 1.04 million and are 16.9 percentrnhigher than a year ago.  The median price in the Midwest was $154,100, uprn5.8 percent from July 2011.</p

Existing-homernsales rose 2.3 percent to an annual level of 1.77 million in the South in Julyrnand are 8.6 percent above July 2011.  The median price in the region was $162,600, up 6.6 percent fromrna year ago.</p

Existing-homernsales in the West were unchanged at an annual pace of 1.08 million in July butrnare 5.9 percent higher than a year ago.  With pronounced inventoryrnshortages, the median price in the West was $238,600, a jump of 24.5 percentrnfrom July 2011.

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