Existing-Home Sales Inventory Remains Lean
Existing-home sales slipped 2.6% in July to a seasonally adjusted annual rate of 7.16 million, the National Association of Realtors® reported last week, but the supply of homes remained on the lean side, continuing to favor sellers and help keep price appreciation at a faster than normal clip.
At an upwardly revised level of 7.35 million in June, housing resales were at an all-time record. July’s rate was the third highest.
“This is a big number any way you slice it, and housing is continuing to stimulate the overall economy,” said David Lereah, the association’s chief economist.
While the national average commitment rate for a 30-year, fixed-rate mortgage inched up from 5.58% in June to 5.70% in July, according to Freddie Mac, the cost of financing remained below the year-earlier average of 6.06%.
Last month’s decline was more pronounced in sales of existing condominiums and cooperatives, which dipped 5% to an annual rate of 915,000 units after setting records four months in a row. Nevertheless, the sales pace of condos and coops was 8.4% ahead of the same time last year.
Single-family home resales were off 2.3% in July, coming in at an annual rate of 6.24 million, which was 4% ahead of sales in July 2004.
At $218,000, the median existing-home sales price in July was up 14.1% from a year earlier. Single-family homes were sold for a median price of $217,900, up 14.6% in a year, and the median condo price was $219,300, 11.3% higher than 12 months earlier.
“In examining the hottest markets for home-price appreciation, we see a rolling boom moving from one metro area to another over time, as well as a spillover effect into nearby areas with lower home prices,” Lereah said.
“This is spreading the wealth of housing returns, with a natural easing of appreciation in areas following a period of extraordinary price growth,” he said. “Even after slowing in a given area, prices typically have continued to rise faster than historic norms.”
The total inventory of existing homes for sale rose 2.6% at the end of July to 2.75 million, a 4.6-month supply at the current sales pace.
However, inventory levels last month were “still quite lean by historic standards,” said Al Mansell, president of the Realtors® association. “If the supply of homes rises, it should reduce competition between buyers and take some of the pressure off of prices. Even so, we expect home price appreciation to remain above normal over the next year.”
Regionally, existing-home sale in July stayed level in the South and declined 1.8% in the Midwest, 3.3% in the Northeast and 7.5% in the West, the Realtors® said.
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