The latest housing report indicates across-the-board growth in every housing market in the country save that in the West where prices remained high and inventory is still tight. The National Association of Realtors (NAR) announced five straight months of increases and experts are prepared to declare a full-on recovery is in the offing. NAR officials have called in the U.S. government to release the foreclosed homes it has in inventory onto the market in areas where sales are brisk and supply is low so that those properties can be cleared off the books a true valuation of home prices can take root. For more on this continue reading the following article from Property Wire.
Sales of existing homes in the United States increased last month the national median price showing five consecutive months of year on year increases, according to the latest data from the National Association of Realtors.
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Monthly sales rose in every region but the West, where inventory is very tight and total existing home sales increased 2.3% to a seasonally adjusted annual rate of 4.47 million in July from 4.37 million in June, and are 10.4% above the 4.05 million-unit pace in July 2011.
NAR chief economist Lawrence Yun said that housing affordability conditions are very good. Single family home sales increased 2.1% to a seasonally adjusted annual rate of 3.98 million in July from 3.90 million in June, and are 9.9% above the 3.62 million unit level in July 2011.
The median existing single family home price was $188,100 in July, up 9.6% from a year ago. Existing condominium and co-op sales rose 4.3% to a seasonally adjusted annual rate of 490,000 in July from 470,000 in June, and are 14% higher than the 430,000 unit pace a year ago.
The median existing condo price was $180,700 in July, which is 7.7% above July 2011. Regionally, existing home sales in the Northeast rose 7.4% to an annual level of 580,000 in July and are 13.7% above July 2011. The median price in the Northeast was $254,200, up 3.5% from a year ago.
Existing home sales in the Midwest increased 2% in July to a pace of 1.04 million and are 16.9% higher than a year ago. The median price in the Midwest was $154,100, up 5.8% from July 2011. In the South, existing home sales rose 2.3% to an annual level of 1.77 million in July and are 8.6% above July 2011. The median price in the region was $162,600, up 6.6% from a year ago.
Existing home sales in the West were unchanged 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. Mortgage interest rates have been at record lows this year while rents have been rising at faster rates.
‘Combined, these factors are helping to unleash a pent-up demand,’ he explained. ‘However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions,’ he added.
NAR is asking the government to expeditiously release the foreclosed properties it owns in inventory constrained markets. Given population and demographic demand, Yun said existing home sales could be in a normal range of five to 5.5 million if all conditions were optimal.
Sales may reach five million next year, but it will require more sensible lending standards and stronger job creation to push beyond that. Fewer sales in the lower price ranges are contributing to stronger increases in the median price, but all of the home price measures now are showing positive movement and that is building confidence in the market.
Furthermore, the higher median price naturally means more housing contribution to economic growth,? Yun said. The national median existing home price for all housing types was $187,300 in July, up 9.4% from a year ago. The last time there were five back to back monthly price increases from a year earlier was in January to May of 2006.
The July gain was the strongest since January 2006 when the median price rose 10.2% from a year earlier. Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 24% of July sales of which 12% were foreclosures and 12% were short sales, down from 25% in June and 29% in July 2011.
Foreclosures sold for an average discount of 17% below market value in July, while short sales were discounted by 15%. The primary factor in determining how long homes stay on the market is price, according to NAR president Moe Veissi. ‘Correctly priced homes, regardless of price range, are selling quickly these days. A third of homes purchased in July were on the market for less than a month, and only 21% were on the market for six months or longer,’ he explained.
Total housing inventory at the end July increased 1.3% 2.4 million existing homes available for sale, which represents a 6.4 month supply at the current sales pace, down from a 6.5 month supply in June. Listed inventory is 23.8% below a year ago when there was a 9.3 month supply. Yun said there are distortions in housing inventory.
‘The total supply of housing inventory appears to be balanced in historic terms, but there are notable shortages in the lower price ranges which are limiting opportunities for first time buyers. The low price ranges also are popular with investors, so entry level buyers are at a disadvantage because many investors are making all cash offers,’ he explained.
First time buyers accounted for 34% of purchasers in July, up from 32% in June and they were also 32% in July 2011. Under normal conditions, entry level buyers account for four out of 10 purchases. All cash sales slipped to 27% of transactions in July from 29% in June, the same as July 2011. Investors, who account for the bulk of cash sales, purchased 16% of homes in July, down from 19% in June and 18% in July 2011.
This article was republished with permission from Property Wire.
