Existing-home sales got a lot stronger in July, a positive switch after total sales were down slightly in June, according to the National Association of Realtors. However, Northeast transactions declined, the other three major U.S. regions recorded sales increases, including increased growth in the West.
Total existing-home sales including existing-home-sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.5 percent from June to a seasonally adjusted annual rate of 5.42 million in July. Overall sales are up 0.6 percent from a year ago (5.39 million in July 2018).
“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s chief economist in an NAR news release. However, he added the supply of affordable housing is severely low. “The shortage of lower-priced homes have markedly pushed up home prices.”
Strong Home Appreciation
Home price appreciation has been much stronger in the lower-price tier compared to homes sold in the upper-price tier, based on the analysis of proprietary deed records data from Black Knight, Inc. and Realtors Property Resource, NAR added.
Of the same homes that were sold in 2018 that were purchased in 2012 in 13 large metro areas (repeat sales transactions), the lower half of the market had increased by more than 100 percent in 2018 in metro areas like Atlanta-Sandy-Springs-Roswell, Ga. (165 percent), Denver-Aurora-Lakewood, Colo. (103 percent), Miami-Fort-Lauderdale, Fla. (119 percent) and Tampa-St. Petersburg-Clearwater, Fla. (125 percent). The median home price for homes bought in the upper half of the market in these same metro areas in 2012 increased at a slower pace when sold in 2018.
“Clearly, the inventory of moderately-priced homes is inadequate and more home building is needed,” Yun said in the news release. “Some new apartments could be converted into condominiums thereby helping with the supply, especially in light of new federal rules permitting a wider use of Federal Housing Administration (FHA) mortgages to buy condo properties.”
The median existing-home price for all housing types in July was $280,800, up 4.3 percent from July 2018 ($269,300). July’s price increase marks the 89th straight month of year-over-year gains.
All Housing Inventory Numbers
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 percent decrease from 1.92 million in 2018. 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 in July 2018.
Properties typically remained on the market for 29 days in July, up from 27 days in June and up from 27 days in July 2018. Fifty-one percent of homes sold in July were on the market for less than a month.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.77 percent in July, down from 3.80 percent in June. The average commitment rate across all of 2018 was 4.54 percent.
“Mortgage rates are important to consumers, but so is confidence about the nation’s overall economic outlook,” Yun continued via the news release. “Home buying is a serious long term decision and current low or even lower future mortgage rates may not in themselves meaningfully boost sales unless accompanied by improved consumer confidence.”
First-time buyers were responsible for 32 percent of sales in July, down from 35 percent in July and about equal to the 32 percent recorded in July 2018. NAR’s 2018 Profile of Home Buyers and Sellers – released in late 2018 – found the annual share of first-time buyers was 33 percent.
As the share of first-time buyers rose, individual investors or second-home buyers, who account for many cash sales purchased 11 percent of homes in July, up from 10 percent recorded in June and down from 12 percent recorded in July a year ago. All-cash sales accounted for 19 percent of transactions in July, up from June and down from July 2018 (16 percent and 20 percent).
Distressed sales – foreclosures and short sales – represented 2 percent of sales in July, unchanged from June but down from 3 percent in July 2018. Less than 1 percent of July sales were short sales.
“Present rates have opened the market for a number of potential buyers who couldn’t afford a home just a year ago,” said NAR President John Smaby in the NAR release.“Additionally, NAR has been working with the FHA for years to establish new condominium loan policies. Our hard work has paid off, and this change will begin benefiting buyers, sellers and our members as soon as this fall.”
Compared to June, existing-home sales recorded in July rose in the Midwest, South and West, but fell a bit in the Northeast region. Compared to 2018, July sales dropped in the Northeast and West while experiencing modest gains in the Midwest and South. Median home prices rose from a year ago, except in the Northeast.
July existing-home sales in the Northeast decreased 2.9 percent to an annual rate of 660,000, a 4.3 percent decline from a year ago. The median price in the Northeast was $305,800, down 1.0 percent from July 2018.
In the Midwest, existing-home sales edged up 1.6 percent to an annual rate of 1.27 million, which is a 0.8 percent increase from July 2018. The median price in the Midwest was $226,300, an 8.1 percent rise from a year ago.
Existing-home sales in the South increased 1.8 percent to an annual rate of 2.31 million in July, up 2.7 percent from 2018. The median price in the South was $245,100, up 5.2 percent from 2018.
Existing-home sales in the West shot up 8.3 percent to an annual rate of 1.18 million in July, only 0.8 percent below a year ago. The median price in the West was $408,000, up 3.7 percent from July 2018.
Single-family and Condo/Co-op Sales
Single-family home sales sat at a seasonally adjusted annual rate of 4.84 million in July, up from 4.71 million in June and up 1.0 percent from a year ago. The median existing single-family home price was $284,000 in July 2019, up 4.5 percent from July 2018.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 580,000 units in July, about equal to the rate from the prior month and down 3.3 percent from a year ago. The median existing condo price was $254,300 in July, which is up 2.5 percent from 2018.