Existing-home sales increased in July to a seasonally adjusted annual rate of 5.59 million, an increase of 2.0% compared with a downwardly revised 5.48 million in June, according to the National Association of Realtors (NAR).
It was the third consecutive month that existing-home sales increased on a month-over-month basis and the 10th consecutive month that they increased on a year-over-year basis. What's more, existing-home sales in July were at the highest pace since February 2007.
‘The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,’ says Lawrence Yun, chief economist for NAR, in a statement. ‘As a result, current homeowners are using their increasing housing equity toward the down payment on their next purchase.’
Despite the increase, the share of first-time home buyers fell to 28%, down from 30% in June to reach the lowest level since January. A year earlier, the share of first-time buyers was about 29%.
The median existing-home price for all housing types in July was $234,000, an increase of 5.6% compared with July 2014. July marked the 41st consecutive month that the average home price increased on a year-over-year basis.
Yun warns that rising home prices could put a damper on future home sale increases.
‘Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand,’ adds Yun. ‘Realtors in some markets reported slower foot traffic in July, in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains.’
As of the end of July, there were about 2.24 million existing homes available for sale – a decrease of 0.4% compared with June and a decrease of 4.7% compared with July 2014. That's about a 4.8-month supply at the current sales pace – down from 4.9 months in June.
About 23% of transactions in July were all-cash, up slightly from 22% in June but down from 29% in July 2014. Individual investors, who account for many cash sales, purchased 13% of homes in July – up from 12% in June but down from 16% in July 2014. NAR adds that 64% of investors paid cash in July.
Distressed sales continued to fall in July and represented about 7% of all sales, down from 8% in June.
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