Existing Home Sales Hit 2014 Peak in July

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Existing home sales in July hit their
best pace so far this year the National Association of Realtors® (NAR) said
today, reflecting a 2.4 percent increase from June to a seasonally adjusted
annual rate of 5.15 million units.   June’s sales were downgraded slightly to 5.03
million units.  The July rate of sales marked
the fourth consecutive monthly increase but was still 4.3 percent under the
rate last July the month with the highest sales in all of 2013.

Lawrence
Yun, NAR chief economist, credited the slowly increasing sales momentum
to stronger job growth and improving inventory conditions. “The number of
houses for sale is higher than a year ago and tamer price increases are giving
prospective buyers less hesitation about entering the market,” he said. “More
people are buying homes compared to earlier in the year and this trend should
continue with interest rates remaining low and apartment rents on the rise.”

Affordability, Yun said, will likely decline in upcoming years. “Although
interest rates have fallen in recent months, median family incomes are still
lagging behind price gains, and mortgage rates will inevitably rise with the
upcoming changes in monetary policy,” he said.  

Single-family home sales increased 2.7 percent to a seasonally adjusted
annual rate of 4.55 million in July from 4.43 million in June, but were 4.2
percent below the 4.75 million pace a year earlier. Existing condominium and
co-op
sales were unchanged from June at an annual rate of 600,000 units, 4.8
percent below the 630,000 unit rate in July 2013. 

The median price of existing homes of all types increased 4.9 percent on an
annual basis to $222,900, the 29th consecutive month of
year-over-year increases.   Single-family homes were priced at a median of
$223,900, 5.1 percent higher than a year earlier and the median condo was
priced at $215,000, a 3.3 percent annual increase. 

The share of distressed homes– foreclosures and short sales – in
July fell below double digits for the first time since NAR first tracked the
category in October 2008.  Nine percent
of all sales were distressed compared to 15 percent in July 2013.  This is in – line with figures announced on
Wednesday by CoreLogic which reported June distressed sales at 11.4 percent,
down from 15.8 percent a year earlier. 

NAR said 6 percent of existing home sales were foreclosed property (REO) and
3 percent short sales. Foreclosures sold for an average discount of 20 percent
below market value while short sales were discounted 14 percent.

Yun says the deepest housing wounds suffered during the Great Recession are
beginning to fully heal. “To put it in perspective, distressed sales
represented an average of 36 percent of sales during all of 2009,” he said.
“Fast-forward to today and rising home values are helping owners recover equity
and strong job creation are assisting those who may have fallen behind on their
mortgage due to unemployment or underemployment.”  

Twenty-nine percent of transactions in July were all-cash sales, down from
32 percent in June and the lowest overall share since January 2013 when 28
percent of sales were cash. Individual investors, who account for many cash
sales, purchased 16 percent of homes in July, unchanged from both last month
and July 2013. Sixty-nine percent of investors paid cash in July.

The percent share of first-time buyers rose slightly from 28 percent in June
to 29 percent in July.  This was the
second consecutive monthly increase but the share of sales to first-time
borrowers remains historically low.

NAR President Steve Brown says the new credit scoring calculation recently
announced by Fair Isaac Corp., or FICO, will improve access to homeownership.
“NAR supports efforts to broaden access to credit for qualified homebuyers,
especially those who have been shut out of the housing market or forced to pay
higher interest rates because of flawed credit scores,” he said. “A solid
credit score is necessary to keep borrowing costs down.”

The inventory of available existing homes for sale rose to 2.37 million at
the end of the reporting period, up 3.5 percent from the end of June.  This represents a 5.5-month supply at the
current sales pace. Unsold inventory is 5.8 percent higher than a year ago when
there were 2.24 million existing homes available for sale.

Regionally, July existing-home sales in the Northeast were unchanged from
the June annual rate of 640,000, 9.9 percent below a year ago. The median price
in the Northeast was $273,600, an increase of 2.4 percent from July 2013.

Existing homes sales in the Midwest increased 1.7 percent to an annual level
of 1.22 million in July, but remain 4.7 percent below July 2013. The median price
in the Midwest was $175,200, a 4.1 percent annual increase.

In the South sales rose 3.4 percent to an annual rate of 2.12 million, a
slight increase (0.5 percent) from July 2013. The median price in the South was
$192,000, up 5.0 percent from a year ago.

Sales in the West climbed 2.6 percent to a 1.17 million pace in July, but this
was 8.6 percent below a year ago. The median price in the West was $304,100,
which is 6.3 percent above July 2013.

The median time on market for all homes was 48 days in July compared to 44
days in June and 42 days in July 2013. Short sales were on the market for a
median of 93 days, foreclosures sold in 58 days and non-distressed homes
typically took 45 days. Forty percent of homes sold in July were on the market
for less than a month.

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