Existing Home Sales Post Modest July Increase
Existing home sales rose for the second straight month to their highest level since March, the National Association of Realtors reported Monday.
The report said July existing home sales (https://www.nar.realtor/existing-home-sales) rose by 2% from June to a seasonally adjusted annual rate of 5.99 million in July. Year over year, sales increased by 1.5 percent (5.9 million).
Single-family home sales increased to a seasonally adjusted annual rate of 5.28 million in July, up 2.7% from 5.14 million in June but down 0.8% from a year ago. The median existing single-family home price rose to $367,000 in July, up 18.6% from July 2020.
Existing condominium and co-op sales fell to a seasonally adjusted annual rate of 710,000 units in July, down from 730,000 in June but up 22.4% from one year ago. The median existing condo price rose to $307,100 in July, an annual increase of 14.1%.
Regionally, results were mostly positive. Sales in the South rose by 1.2% in July to an annual rate of 2,630,000, and improved by 1.2% from a year ago. The median price in the South rose to $305,200, a 14.4% jump from one year ago. Sales in the West rose by 3.3% to an annual rate of 1,240,000 in July and held steady from a year ago. The median price in the West rose to $508,300, up 12.5% from a year ago.
Sales in the Northeast held at an annual rate of 740,000 for the second straight month and rose by 12.1% from a year ago. The median price in the Northeast jumped to $411,200, up 23.6% from a year ago. Sales in the Midwest rose by 3.8% to an annual rate of 1,380,000 in July but fell by 1.4% from a year ago. The median price in the Midwest rose to $275,300 and increased by 13.1% from a year ago.
“The July increase in existing-home sales to just under a 6-million-unit pace was the strongest pace of sales since March 2021,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “The median sales price slightly declined in July to $359,900, but was almost 18 percent higher than a year ago. However, there was a much-needed 7% increase in housing inventory, which should help ease some of the rapid home-price appreciation in many markets.”
Mark Vitner, Senior Economist with Wells Fargo Economics, Charlotte, N.C., said the housing market is “slowly moving back into balance.”
“Higher prices have brought out more sellers,” Vitner said. “With more homes on the market, price appreciation has moderated ever so slightly, taking price gains down a notch from the mesosphere to the stratosphere.”
Having said, that, Vitner noted this is still a seller’s market. “Homes are selling quickly and often with few contingencies,” he said. “We expect the housing market to move into better balance during the second half of the year, as higher prices bring out more sellers and new home construction ramps up. This appears to be the case, with rising inventories helping temper the red-hot market seen earlier this year.”
“We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” said Lawrence Yun, NAR chief economist. “Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”
The report said total housing inventory at the end of July totaled 1.32 million units, up 7.3% from June’s supply but down 12% from one year ago (1.50 million). Unsold inventory sits at a 2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months a year ago.
The median existing home price for all housing types in July jumped to $359,900, up 17.8% from a year ago ($305,600), marking 113 straight months of year-over-year gains.
“Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” Yun said. “In the meantime, some prospective buyers who are priced out are raising the demand for rental homes and thereby pushing up the rental rates.”
The report said properties typically remained on the market for 17 days in July, unchanged from June and down from 22 days in July 2020. Eighty-nine percent of homes sold in July were on the market for less than a month.
First-time buyers accounted for 30% of sales in July, down from 31% in June and down from 34% a year ago. “With median sales prices remaining close to record highs, there are prospective buyers who are priced out, and first-time buyers tend to be particularly sensitive to these elevated prices,” Kan said. “They are also competing with an elevated share of cash buyers.”
Individual investors or second-home buyers purchased 15% of homes in July, up from 14% in June unchanged from a year ago. All-cash sales accounted for 23% of transactions in July, unchanged from June and up from 16% from a year ago.
Distressed sales represented less than 1% of sales in July, unchanged from June and from a year ago.