Existing-home sales increase 2.5 percent in July
After a slight dip the previous month, July brought an increase of 2.5 percent to a seasonally adjusted annual rate of 5.42 million—up 0.6 percent from a year ago. “Falling mortgage rates are improving housing affordability and nudging buyers into the market,” explains Lawrence Yun, the National Association of Realtor’s chief economist. Though he continues on to explain the affordable housing supply combats the increase of buyers entering the market. “The shortage of lower-priced homes has markedly pushed up home prices.”
The lower-price tier has demonstrated stronger home price appreciation in comparison to the upper-price tier, according to an analysis of proprietary deed records data from Black Knight, Inc. and Realtors Property Resource®. Homes purchased in 2012 and sold in 2018 in the lower half of the market increased by over 100 percent, while the median home price for homes purchased in the upper half of the market increased at a significantly slower pace.
A call for construction
“Clearly, the inventory of moderately-priced homes is inadequate, and more home building is needed,” said Yun. “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.”
July’s median existing-home price for all housing types was $280,800–up 4.3 percent from last year–marking the 89th straight month of year-over-year gains. Total housing inventory decreased from 1.92 million existing homes available for sale in June, to 1.89 million available in July—a 1.6 percent decrease from last year. At the current sales pace, unsold inventory is at a 4.2-month supply, which is down from the 4.4-month supply recorded in June and the 4.3-month supply recorded last year.
Of the homes sold in July, 51 percent were on the market for less than a month, with the average property remaining on the market for 29 days. And Freddie Mac reports 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.
Market accessibility and consumer confidence
“Mortgage rates are important to consumers, but so is confidence about the nation’s overall economic outlook,” Yun explains. “Homebuying 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.”
NAR President John Smaby comments on the market’s accessibility, stating, “Present rates have opened the market for a number of potential buyers who couldn’t afford a home just a year ago. 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.”
Reports from the four major regions
From a regional standpoint, existing-home sales in July increased in three of the four major regions. While the Northeast decreased 2.9 percent, the Midwest was up 1.6 percent, the South increased 1.8 percent and the West saw the biggest increase of 8.3 percent.
Single-family home sales were up from 4.71 million in June to 4.84 million in July—a 1.0 percent increase from last year, while the median existing single-family home price was $284,000 in July—up 4.5 percent from last year.
At a rate of 580,000 units, existing-condominium and co-op sales in July were about equal to the rate from June, but down 3.3 percent from last year. The median existing-condo price was $254,300 in July—a 2.5 percent increase from last year.