Existing homes sale rose to an annual rate 4.47 million in July, the National Association of Realtors reported Wednesday. Economists had expected the sale pace to be 4.51 million. The median price of an existing home though fell in July for the first time since January. The median price of an existing home fell $1,500, 0.8%, from June to $187,300. The median price was up year-year for the fifth straight month in July, $16,100 or 9.4% from July 2011 – the strongest year-year gain since January 2006.
Even with the improvement in the sales rate, Lawrence Yun, NAR’s chief economist, said the sales pace was far below what it should be. Given population and demographic demand, Yun said existing-home sales could be in a normal range of 5 to 5.5 million if all conditions were optimal. “Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that,” he said. The increase in the July sales rate – 100,000 – was less than half of the 250,000 drop in the sales pace registered for June. The 2.3% month-month increase was also less than the 5.4% increase in the pending home sales index for May suggesting borrowers who entered into contracts in May (which would have closed in July) cancelled agreements to buy.
Even with the improvement in the sales rate, Lawrence Yun, NAR’s chief economist, said the sales pace was far below what it should be. Given population and demographic demand, Yun said existing-home sales could be in a normal range of 5 to 5.5 million if all conditions were optimal. “Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that,” he said. The increase in the July sales rate – 100,000 – was less than half of the 250,000 drop in the sales pace registered for June. The 2.3% month-month increase was also less than the 5.4% increase in the pending home sales index for May suggesting borrowers who entered into contracts in May (which would have closed in July) cancelled agreements to buy.
With the month-month increase in sales, existing home sales continued the steady uphill climb from the cyclical tough of a sales pace of 3.39 million in July 2010. In the last six months sales have averaged 4.525 million compared with 4.403 million in the previous six months and 4.177 million in the six months before that. The inventory of homes for sale rose to 2.4 million in July – 23.8% below the year-earlier level — from 2.37 million in June.
With the month-month increase in the sales pace, the months’ supply of existing homes on the market dipped to 6.4 months, well below the cyclical peak of 12.4 months in July 2010 At 6.4 months, the supply is just below the 6.5 month long term average dating back to January 1999 when the NAR reports began.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 24% of July sales (12 percent were foreclosures and 12 percent were short sales), the NAR said, down from 25% in June and 29% in July 2011. Foreclosures, according to the NAR report, sold for an average discount of 17% below market value in July, while short sales were discounted 15%.
Existing-home sales in the West were unchanged from June at an annual pace of 1.08 million in July but are 5.9% higher than a year ago. With pronounced inventory shortages, the median price in the West was $238,600, a jump of 24.5% from July 2011.
With the month-month increase in the sales pace, the months’ supply of existing homes on the market dipped to 6.4 months, well below the cyclical peak of 12.4 months in July 2010 At 6.4 months, the supply is just below the 6.5 month long term average dating back to January 1999 when the NAR reports began.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 24% of July sales (12 percent were foreclosures and 12 percent were short sales), the NAR said, down from 25% in June and 29% in July 2011. Foreclosures, according to the NAR report, sold for an average discount of 17% below market value in July, while short sales were discounted 15%.
Existing-home sales in the West were unchanged from June at an annual pace of 1.08 million in July but are 5.9% higher than a year ago. With pronounced inventory shortages, the median price in the West was $238,600, a jump of 24.5% from July 2011.
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