Existing Home Sales In July – Good or Bad?
July Existing Homes Sale Are Up!
According to the National Association of REALTORS®, total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July.
Overall sales are up 0.6% from a year ago (5.39 million in July 2018).
Mortgage Rates Are Improving!
“Falling mortgage rates are improving housing affordability and nudging Buyers into the market,” said Lawrence Yun, NAR’s chief economist. However, he added that the supply of affordable housing is severely low. “The shortage of lower-priced homes have markedly pushed up home prices.”
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®.
“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.”
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% decrease from 1.92 million one year ago. 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 of 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 of 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(link is external) for a 30-year, conventional, fixed-rate mortgage decreased to 3.77% in July, down from 3.80% in June. The average commitment rate across all of 2018 was 4.54%.
“Mortgage rates are important to consumers, but so is confidence about the nation’s overall economic outlook,” Yun continued. “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% of sales in July, down from 35% the month prior and about equal to the 32% recorded in July 2018. NAR’s 2018 Profile of Home Buyers and Sellers – released in late 2018 – revealed that the annual share of first-time buyers was 33%.
As the share of first-time Buyers rose, individual investors or second-home Buyers, who account for many cash sales purchased 11% of homes in July, up from 10% recorded in June 2019 and down from 12% recorded in July a year ago. All-cash sales accounted for 19% of transactions in July, up from June and down from July of 2018 (16% and 20%, respectively).
“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, a second-generation Realtor® from Edina, Minnesota, and broker at Edina Realty. “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 slightly in the Northeast region. Compared to last year, 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% to an annual rate of 660,000, a 4.3% decline from a year ago. The median price in the Northeast was $305,800, down 1.0% from July 2018.
In the Midwest, existing-home sales edged up 1.6% to an annual rate of 1.27 million, which is a 0.8% increase from July 2018. The median price in the Midwest was $226,300, an 8.1% surge from a year ago.
Existing-home sales in the South increased 1.8% to an annual rate of 2.31 million in July, up 2.7% from a year ago. The median price in the South was $245,100, up 5.2% from one year ago.
Existing-home sales in the West shot up 8.3% to an annual rate of 1.18 million in July, just 0.8% below a year ago. The median price in the West was $408,000, up 3.7% from July 2018.
July 2019 Housing Statistics Courtesy of the National Association of REALTORS®.