Sales of Existing Homes Near Two-Year High

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The National Association of Realtors (NAR) reports that the seasonally adjusted annual rate of existing home sales in July rose 6.5% to 5.39 million from a downwardly revised total of 5.06 million in June. Sales are up 17.2% year-over-year for the month. The consensus estimate called for sales to reach 5.13 million.

Housing inventory rose again in July, up 5.6% to 2.28 million homes, which is equal to a supply of 5.1 months, unchanged from June. Listed inventory is down 5% year-over-year, when there was a 6.3 month supply available.

According to the NAR, the national median existing home price in July was $213,500, down from $214,200 in June, but up 13.7% compared with July 2012. That marks the 17th consecutive month to see a price gain and the seventh consecutive month of double-digit increases. The last time housing prices went on such a string of price increases was the period between January 2005 and May 2006.

NAR’s chief economist said:

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.

Foreclosed and short sales accounted for 15% of July sales, the same as June sales, and below the 24% share in July 2012. Foreclosures sold at an average 16% discount to the July median price, while short sales sold at a discount of 12%. Both discounts were roughly equal month-over-month.

Existing, nondistressed homes were on the market for an average of 42 days, while foreclosed homes were on the market for an average of 50 days, and short sales took a median of 72 days to sell. These counts are all higher than they were a month ago.

The inventory of existing homes for sale continues to rise, although it is still below inventory levels of a year ago. The pace of growth in year-over-year has flattened out though.