Sales of existing homes have continued to improve. In July, one-third of all homes sold were on the market for less than a month. In fact, every region except the West, where inventory was low, saw a rise in monthly sales.
NAR Chief Economist Lawerence Yun believes that affordability conditions are very good for the housing market. “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,” Yun said. “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.”
With mortgage rates beginning to rise, coupled with strong affordability, now is one of the best times in history to buy.
Mortgage rates at or around 3.66% are up slightly from 3.53%, possibly indicating rates have finally hit bottom. These are some of the lowest rates on record since 1971, increasing the urgency to buy now.
While home sales grew 2.3% from last month to 4.47 million units, year-over-year sales increased 10.4%. According to the National Association of Realtors, existing home sales rose in July with the national median sales price reaching fire consecutive months of the year-over-year growth. Distressed homes (which include short sales and foreclosures traditionally sell for 15%-20% less on average compared to non-distressed homes) allotted for 24% of July sales, which is down from 25% in June, but is 29% below year-ago sales. Even with declines in distressed home levels, sales of these properties are still expected to be higher than the historic average.
Rising inventory supply has placed downward pressure on home prices. The median home price fell 1% from last month, but rose 9.4% compared to a year earlier to $187,300. This marks the fifth consecutive month of year-over-year price gains, which has not been seen since January to May 2006. July’s gains are the most robust since January of 2006 when median home prices rose 10.2% from 2005.
Housing inventory increased 1.3% in July to 2.4 million homes available for sale, a 6.4-month supply. This marks the eighth consecutive month of inventory at a 6-month supply, the threshold for a balanced market, giving both buyers and sellers an equal advantage. As supply continues to hold steady at more balanced levels, so does the idea that the housing market is moving closer to a full-scale recovery.