WASHINGTON — Listings in July typically went under contract in under 30 days for the fourth consecutive month because of high buyer demand, but existing-home sales ultimately pulled back as large declines in the Northeast and Midwest outweighed sales increases in the South and West, according to the National Association of Realtors.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, slipped 1.3% to a seasonally adjusted annual rate of 5.44 million in July from a downwardly revised 5.51 million in June. July’s sales pace is still 2.1% above a year ago, but is the lowest of 2017.
Lawrence Yun, NAR chief economist, says the second half of the year got off on a somewhat sour note as existing sales in July inched backward. “Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” he said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”
The median existing-home price for all housing types in July was $258,300, up 6.2% from July 2016 ($243,200). July’s price increase marks the 65th straight month of year-over-year gains.
Total housing inventory at the end of July declined 1.0% to 1.92 million existing homes available for sale, and is now 9.0% lower than a year ago (2.11 million) and has fallen year-over-year for 26 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.8 months a year ago.
“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
Properties typically stayed on the market for 30 days in July, which is up from 28 days in June but down from 36 days a year ago. Fifty-one% of homes sold in July were on the market for less than a month.
Inventory data from realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in July were Seattle-Tacoma-Bellevue, Wash., 28 days; San Jose-Sunnyvale-Santa Clara, Calif., 30 days; and Salt Lake City, Utah, and Vallejo-Fairfield, Calif., 31 days.
“July was the fourth consecutive month that the typical listing went under contract in under one month,” said Yun. “This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”
First-time buyers were 33% of sales in July, which is up from 32% both in June and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 2016 – revealed that the annual share of first-time buyers was 35%.
According to President William E. Brown, a Realtor from Alamo, California, there’s a prominent misconception – especially among non-homeowners – that a down payment of at least 20% is needed to buy a home. “Every month this year, roughly 60% of buyers who financed their purchase with a mortgage made a down payment that was 6% or less,” he said. “Potential buyers with solid employment and manageable levels of debt will find that there are mortgage options available. Talk to a lender to find out what you qualify for based on your savings and let that guide you as you begin your home search with a Realtor.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.97% in July from 3.90% in June. The average commitment rate for all of 2016 was 3.65%.
All-cash sales were 19% of transactions in July, up from 18% in June but down from 21% a year ago. Individual investors, who account for many cash sales, purchased 13% of homes in July, unchanged from June and down from 11% a year ago.
Distressed sales – foreclosures and short sales – were 5% of sales in July, up from 4% in June and unchanged from a year ago. Four% of July sales were foreclosures and 1% were short sales.
Single-family and Condo/Co-op Sales
Single-family home sales decreased 0.8% to a seasonally adjusted annual rate of 4.84 million in July from 4.88 million in June, but are still 1.7% above the 4.76 million pace a year ago. The median existing single-family home price was $260,600 in July, up 6.3% from July 2016.
Existing condominium and co-op sales fell 4.8% to a seasonally adjusted annual rate of 600,000 units in July, but are still 5.3% higher than a year ago. The median existing condo price was $239,800 in July, which is 5.3% above a year ago.
July existing-home sales in the Northeast dropped 14.5% to an annual rate of 650,000, and are now 1.5% below a year ago. The median price in the Northeast was $290,000, which is 4.1% above July 2016.
In the Midwest, existing-home sales fell 5.3% to an annual rate of 1.25 million in July, and are now 1.6% below a year ago. The median price in the Midwest was $205,400, up 5.9% from a year ago.
Existing-home sales in the South rose 2.2% to an annual rate of 2.28 million in July, and are now 3.6% higher than a year ago. The median price in the South was $227,700, up 6.7% from a year ago.
Existing-home sales in the West jumped 5.0% to an annual rate of 1.26 million in July, and are 5.0% above a year ago. The median price in the West was $373,000, up 7.6% from July 2016.
The National Association of Realtors, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Source: National Association of Realtors