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Existing Home Sales Up for the Fourth Consecutive Month

Sales of existing homes have increased for four months in a row for July, according to a report released today by the National Association of Realtors (NAR).

Existing-home sales - including single-family, townhomes, condominiums, and co-ops - increased 7.2% to a seasonally-adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June, NAR reported. The rate of sales in July was 5% higher than it was a year ago.

The last time there were four consecutive monthly increases in sales was five years ago in June 2004. Lawrence Yun, NAR cheif economist, said he is encouraged. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he said.

The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999, NAR reported. The housing market has been battered into affordability for many with the combination of the tax credit, overall low prices, and historically low mortgage interest rates - 5.22% for a thirty-year fixed in June.

Investors are snapping up the deals on foreclosed properties - distressed home sales accounted for 31% of transactions. “Because price-to-income ratios have fallen below historical trends, there are more all-cash offers. In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint,” Yun said.

The first-time home buyers's credit has also made a big impact on the housing market - first-time home buyers accounted for 30% of transactions. NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the first-time buyer tax credit is working.

“In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move,” McMillan said.

McMillan said, "Since it’s now taking longer to complete a home sale, first-time buyers who want to take advantage of the $8,000 tax credit should try to make contract offers by the end of September,” McMillan said. “Otherwise, they may miss the November 30 closing deadline.”

The total housing inventory at the end of July rose 7.3% to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace - which was unchanged from June because of the strong sales gain. Raw inventory totals are 10.6% lower than a year ago when the number of unsold homes was at a record.

The national median existing-home price for all housing types was $178,400 in July, down 15.1% from July 2008. Distressed properties continue to weigh down the median price because they typically sell for 15% to 20% less than traditional homes.

Single-family home sales increased 6.5% to a seasonally adjusted annual rate of 4.61 million in July from a pace of 4.33 million in June - 5% higher than the 4.39 million-unit level in July 2008. The median existing single-family home price was $178,300 in July, which is 14.6% below a year ago.

Sales for existing condominium and co-op increased 12.5% to a seasonally adjusted annual rate of 630,000 units in July from 560,000 in June, and are 5.9% above the 595,000-unit level a year ago. The median existing condo price was $178,800 in July, down 18.9% from July 2008.

Regionally, existing-home sales in the Northeast jumped 13.4% to an annual rate of 930,000 in July, and are 3.3% higher than a year ago. The median price in the Northeast was $236,700, down 15% from July 2008.

Existing-home sales in the Midwest jumped 10.9% in July to a level of 1.22 million and are 8% above a year ago. The median price in the Midwest was $157,200, which is 5.9% less than July 2008.

In the South, existing-home sales rose 7.1% to an annual pace of 1.95 million in July and are 5.4% higher than it was a year ago. The median price in the South was $164,500, down 7.1% compared to July 2008.

Existing-home sales in the West dipped 1.7% to an annual rate of 1.13 million in July, but are 1.8% above the rate in July 2008. The median price in the West was $202,300, down 28% from July 2008.

National Association of Realtors
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Thursday, 09 July 2020

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