Existing Home Sales Spike As New Home Sales Taper Off
Existing home sales rose strongly in last month, with the median price maintaining double-digit year-over-year increases. Meanwhile new homes sales tapered off, despite median prices continue to rise. Total existing home sales increased 6.50% to an annual rate of 5.39 million from a downward revised 5.06 million the month previous, and are 17.2% above the 4.60 million-unit pace set in July 2012; sales have remained above year-ago levels for 25-consecutive months. Sales of new homes decreased dramatically by 13.41% to an annual rate of 394,000 down from 455,000 the month before.
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 start to diminish the pool of eligible buyers.
Despite higher mortgage interest rates, compensating factors that can sustain a continued recovery. Even as affordability conditions become less attractive, jobs are still being added to the economy, and underwriting standards should start to normalize over time from current stringent conditions.
Total housing inventory at the end of July rose 5.60% to 2.28 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, unchanged from last month. Listed inventory is 5.00% below a year ago, when there was a 6.3-month supply. Tight inventory in many areas means above-normal price growth for the foreseeable future.
The national median existing home price for all housing types was $214,000 in which is 13.70% above July 2012. This marks 17-consecutive months of year-over-year price increases, which last occurred from January 2005 to May 2006. For new homes the national median home price rose a modest 3.00% which is 8.34% above year'ago figures.
The median price got existing home has risen at double-digit rates for the past eight months, and is now 7.30% below the all-time record of $230,400 in July 2006. Two years ago, the median price was 25.70% below the peak.
Regionally, home sales in the Northeast surged 12.70% percent to an annual rate of 710,000 in and are 20.30% above July 2012. The median price in the Northeast was $271,200, up 6.70% from a year ago. Home sales in the Midwest rose 5.80% to a pace of 1.28 million, and are 20.80% higher than a year ago. The median price in the Midwest was $168,300, which is 9.5% above July 2012.
In the South, home sales increased 5.00% to an annual level of 2.11 million and are 16.60% above July 2012. The median price in the South was $183,400, up 13.60% from a year ago. Home sales in the West rose 6.60% to a pace of 1.29 million and are 13.20% percent higher than a year ago. The median price in the West, driven the most by a supply imbalance, was $287,500, which is 19.20% above July 2012.