July Housing Report – Home Sales High
Existing-Home Sales increased in July, marking the highest annual pace of the year. Sales rose 2.4 percent to a seasonally adjusted annual rate of 5.15 million in July from a 5.03 million in June. Although sales are at their highest and have been rising for the past four consecutive months, the stats still remain below the levels of last year at this time.
Total housing inventory rose 3.5% to 2.37 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace.
Lawrence Yun, NAR chief economist says that as job growth and improving inventory conditions continue, sales momentum will follow suit:
The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market. More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise.
Margaret Kelly, RE/MAX CEO agrees:
After a slow start to the year, 2014 home sales have been improving. Sales are following the expected seasonal pattern and are approaching the levels we saw last year. As inventory continues to build the recovery continues at a more stable and sustainable rate.
Yun points to an unfortunate forecast when it comes to declining affordability:
Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy.
July marks the 29th consecutive month of year-over-year price gains. The median existing-home price for all housing types in July was $222,900, which is 4.9 percent above July 2013.
Distressed homes made up 9% of July sales. This is down 15% from last year and since 2008, when this category was first tracked, they are finally down in the single-digits. Yun thinks that the most severe housing afflictions suffered during the Great Recession are beginning to fully heal:
To put it in perspective, distressed sales represented an average of 36 percent of sales during all of 2009. Fast-forward to today and rising home values are helping owners recover equity and strong job creation are assisting those who may have fallen behind on their mortgage due to unemployment or underemployment.
NAR President, Steve Brown nodded at some good news regarding a new credit scoring calculation for everyone seeking homeownership announced by FICO:
NAR supports efforts to broaden access to credit for qualified homebuyers, especially those who have been shut out of the housing market or forced to pay higher interest rates because of flawed credit scores. A solid credit score is necessary to keep borrowing costs down.
Although we are entering into the season for slow home sales, this year there could be a slight rebound in U.S. housing. A Redfin report noted that the number of homes that sold above list price in July was down nearly 26 percent from a year ago and so now more sellers are lowering their price expectations. Lower prices, combined with still-low mortgage rates and increasing supply could give the sales stats a shove. Traditionally, sales take a dip in the fall; with the opening of the school year few are looking to move. Right now, homebuyers looking for the best deals ought to off-season shop!