Sales of existing homes leapt ahead more than anticipated in July while the median prices continued to hold strong, according to the latest stats from the National Association of Realtors released on Wednesday.
Existing home sales, which are completed transactions of single-family homes, townhouses, condos and co-ops, rose 6.5 percent in July to an annualized rate of 5.39 million units from a downwardly revised 5.06 million pace in June. The NAR originally estimated June’s figure at 5.08 million. Economists expected a rise in July to an annual rate of 5.18 million units. July’s figure represents the highest annual rate since November 2009, when houses sold at a 5.44 million annual rate as a tax credit was coming to an end.
Compared to July 2012, which stood at a 4.6-million rate, the pace last month was ahead by 17.2 percent, marking the 25 consecutive monthly year-over-year improvement.
The national median price for an existing-home (the point where half the homes for sale are more expensive and half are less expensive) was $213,500 in July, up 13.7 percent from July 2012, although slightly down (by $700) from June. Still, though, the median price is only 7.3 percent below the record high of $230,400 hit in July 2006.
Inventories of existing homes on the market rose 5.6 percent in July to 2.28 million units, representing a 5.1-month supply at the current pace. At the same time last year, there were enough houses for sale to last 6.3 months. The tight supply is responsible for prices continuing to rise.
The national average of a 30-year, fixed-rate note was up to 4.37 percent in July from 4.07 percent in June. Since May, it’s risen a full point. The plans of the Federal Reserve to eventually begin tapering its monetary stimulus package have been the leading contributor to a rise in rates. Lawrence Yun, NAR chief economist, expressed a bit of concern over rising interest rates in today’s report. Yun noted, “Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines. The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.”
Foreclosures and short sales only accounted for 15 percent of sales in July, down significantly from 24 percent in July 2012. That’s the lowest percentage since the stat started being tracked in October 2008.
The bottom line here is that the housing market is still holding its path to recovery. The country may see a lag in coming months as prices keep trying to climb and rising interest rates deter some people moving up to a different home. Right now, the growing strength will likely give the Fed more confidence in starting to put the brakes on its practice of buying $85 billion every month in mortgage-backed securities and Treasuries, which most economists expect to happen next month.
As the day winds to a close, the markets are clawing their way off off intraday lows since the NAR report and the minutes just released from the latest Federal Open Market meeting that showed wide support to begin tapering in 2013, although no clear date was reported. The Dow has climbed to within 10 points of even, the S&P 500 is now printing in the green by 1 point and the Nasdaq is up by 10 points after all three benchmark indices spent a good portion of the day in negative territory.