July Existing Homes Post Modest Increase

Existing home sales increased in July, rebounding from a drop in June, the National Association of Realtors reported yesterday.

NAR said total existing-home sales rose by 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July. Overall sales improved by 0.6% from a year ago (5.39 million). Single-family home sales rose to 4.84 million in July, seasonally annually adjusted, from 4.71 million in June and improved by 1% from a year ago. The median existing single-family home price rose to $284,000 in July, up 4.5% from a year ago.

Existing condominium and co-op sales rose to a seasonally adjusted annual rate of 580,000 units in July, unchanged from June and down 3.3% from a year ago. The median existing condo price was $254,300 in July, up by 2.5% from a year ago.

Regionally sales rose in the Midwest, South and West, but fell slightly in the Northeast. From a year ago, July sales dropped in the Northeast and West and in the Midwest and South. Median home prices rose from a year ago, except in the Northeast.

Sales in the South increased by 1.8% to an annual rate of 2.31 million in July, up by 2.7% from a year ago. The median price in the South rose to $245,100, up 5.2% from a year ago. Sales in the West jumped by 8.3% to an annual rate of 1.18 million in July, but fell by 0.8% from a year ago. The median price in the West rose to $408,000, up 3.7% from a year ago.

Sales in the Northeast decreased by 2.9% to an annual rate of 660,000, a 4.3% decline from a year ago. The median price in the Northeast fell to $305,800, down 1.0% from July 2018. In the Midwest, sales edged up 1.6% to an annual rate of 1.27 million, an 0.8% increase from a year ago. The median price in the Midwest rose to $226,300, an 8.1% surge from a year ago.

Mark Vitner, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said lower mortgage rates are giving home buying a boost–albeit a slight one. “But many potential buyers are still being put off by the lack of affordable homes available for sale,” he said. “Demand for lower priced condos remains fairly strong in many other areas, but sales are being held back by a lack of supply. The lack of affordable product remains a major hurdle in the single-family market, too.”

“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said NAR Chief Economist Lawrence Yun. “However, the supply of affordable housing is severely low. The shortage of lower-priced homes have markedly pushed up home prices.”

NAR reported the median existing home price for all housing types in July rose to $280,800, up 4.3% from a year ago ($269,300). July’s price increase marks the 89th straight month of year-over-year gains. Total housing inventory at the end of July decreased to 1.89 million, down from 1.92 million existing-homes available for sale in June, and a 1.6% decrease from 1.92 million one year ago. Unsold inventory is at a 4.2-month supply at the current sales pace, down from the 4.4 month-supply recorded in June and down from the 4.3-month supply recorded a year ago.

The report said properties typically remained on the market for 29 days in July, up from 27 days in June and up from 27 days a year ago. Fifty-one percent of homes sold in July were on the market for less than a month.

NAR said first-time buyers were responsible for 32% of sales in July, down from 35% the month prior and about equal to the 32% recorded a year ago. The annual share of first-time buyers was 33%.

As the share of first-time buyers rose, individual investors or second-home buyers, who account for many cash sales purchased 11% of homes in July, up from 10% recorded in June 2019 and down from 12% recorded a year ago. All-cash sales accounted for 19% of transactions in July, up from June and down from a year ago (16% and 20%, respectively).

Distressed sales represented 2% of sales in July, unchanged from June but down from 3% in July 2018. Less than 1% of July sales were short sales.