Existing-home sales hit their highest pace in more than eight years, reaching an adjusted annual rate of 5.49 million units in June – an increase of about 3.2% compared to a downwardly revised annual rate of about 5.32 million units in May and up 9.6% compared to an annual rate of 5.01 million units in June 2014, according to the National Association of Realtors (NAR).
Sales in June were about on par with those seen in February 2007, according to NAR.
It was the ninth consecutive month that existing home sales increased on a year-over-year basis.
The increase in existing-home sales came as home prices reached an all-time high: The median existing-home price for all housing types in June was $236,400, an increase of 6.5% compared to June 2014.
In fact, the average home price in June surpassed the peak median sales price of $230,400 set in July 2006.
June marked the 40th consecutive month that the average home price increased on a year-over-year basis.
A slight increase in housing inventory in June may have helped increase existing-home sales. There were about 2.30 million existing homes available for sale at the end of June, an increase of 0.9% compared to May and up 0.4% compared to June 2014.
That was about a five-month supply, down from 5.1 months in May.
‘Buyers have come back in force, leading to the strongest past two months in sales since early 2007,’ proclaims Lawrence Yun, chief economist for NAR, in a release.’This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy.’
Yun says the increase in June may have also been spurred by rising mortgage interest rates: Often, people thinking about buying a home will jump on the opportunity if they can do it before rates rise again.
Still, rising prices is likely holding existing-home sales back, to a degree.
‘Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,’ Yun says. ‘Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.’
About 30% of sales in June were to first-time homebuyers, down from 32% in May, but up from 28% a year earlier.
All-cash sales were 22% of transactions in June, down from 24% in May and 32% a year earlier.
Distressed sales – including foreclosures and short sales – fell to 8% of all sales in June, down from 10% in May and down from 11% in June 2014.
Existing home sales were up in all four regions tracked in NAR's report. For more, click here.