The National Association of Realtors® reports sales of existing homes rose in July and the national median price has increased for five consecutive months of year-over-year increases, which means the housing market could actually contribute to the nation’s economic growth if the trend continues.
Total existing homes sales grew 2.3 percent 4.37 million in June to a seasonally adjusted annual rate of 4.47 million in July. That’s 10.4 percent above the 4.05 million-unit pace in July 2011, according to a NAR press release. The statistic includes completed transactions of single-family homes, townhomes, condominiums and co-ops.
“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates," says Lawrence Yun, NAR chief economist. “Combined, these factors are helping to unleash a pent-up demand. However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”
NAR is asking the government to quickly release the foreclosed properties it owns in inventory-constrained markets.
“Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that,” Yun says.
He attributes stronger increases in median home prices to fewer sales in the lower price ranges, “but all of the home price measures now are showing positive movement and that is building confidence in the market. Furthermore, the higher median price naturally means more housing contribution to economic growth.”
The national median existing-home price for all housing types was $187,300 in July, up 9.4 percent from a year ago. The last time there were five back-to-back monthly price increases from a year earlier was in January to May of 2006. The July gain was the strongest since January 2006, when the median price rose 10.2 percent from a year earlier, the NAR reports.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 24 percent of July sales (12 percent were foreclosures and 12 percent were short sales), down from 25 percent in June and 29 percent in July 2011.
Foreclosures sold for an average discount of 17 percent below market value in July, while short sales were discounted 15 percent.
Total housing inventory at the end July increased 1.3 percent to 2.40 million existing homes available for sale, which represents a 6.4-month supply at the current sales pace, down from a 6.5-month supply in June. Listed inventory is 23.8 percent below a year ago when there was a 9.3-month supply.
“The total supply of housing inventory appears to be balanced in historic terms, but there are notable shortages in the lower price ranges which are limiting opportunities for first-time buyers,” he says. “The low price ranges also are popular with investors, so entry-level buyers are at a disadvantage because many investors are making all-cash offers.”
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