The national housing market continued to improve in July when existing-home sales reached their highest annual sales pace so far this year, NATIONAL ASSOCIATION OF REALTORS® data show.
The median existing-home price rose to $222,900 in July, up 4.9% from July 2013. This marks the 29th consecutive month of year-over-year price gains. The median condo price was $215,000 in July, up 3.3% from July 2013.
And in another sign of economic and real estate recovery, the proportion of distressed homes — foreclosures and short sales — accounted for just 9% of July sales. That’s down from 15% a year ago and marks the first time distressed home sales were in the single-digits since NAR started tracking the category in October 2008.
The data indicates the deepest housing wounds suffered during the Great Recession are beginning to fully heal, said NAR Chief Economist Lawrence Yun. “To put it in perspective, distressed sales represented an average of 36% of sales during all of 2009,” he said. “Fast-forward to today and rising home values are helping owners recover equity. Strong job creation is helping those who may have fallen behind on their mortgage because of unemployment or underemployment.”
Sales Momentum Builds
Total sales of existing single-family homes, townhomes, condominiums and co-ops rose 2.4% in July. Sales are at the highest pace of 2014 and have risen four consecutive months, but remain 4.3% below last July, which was the peak of 2013.
Sales momentum is slowly building behind stronger job growth and improving inventory conditions. “More people are buying homes compared with earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise,” Yun said.
Yun does warn that affordability is likely to decline in upcoming years. “Although interest rates have fallen in recent months, median family incomes are still lagging price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy,” he said.
At the end of July there were 2.37 million existing homes for sale. At the current rate they’re selling, it will take 5.5 months for them to change hands. A 6-month supply of homes is considered a balanced market that favors neither sellers nor buyers.
Who’s Buying Homes?
July all-cash sales: 29% of transactions, down from 32% in June, representing the lowest overall share since January 2013 (28%).
Individual investors: Purchased 16% of homes in July, unchanged from last month and July 2013. Sixty-nine percent of investors paid cash in July.
First-time buyers: The percentage rose slightly in July for the second straight month to 29% (28% in June), but remains historically low.
Credit Score Boost Would Help Markets
All buyers could benefit from a new version of the popular FICO credit score due out this fall, said NAR President Steve Brown. The change will help raise credit scores for consumers whose only unpaid bills are medical debt and those who pay off debts sent to collection.
“NAR supports efforts to broaden access to credit for qualified homebuyers, especially those who have been shut out of the housing market or forced to pay higher interest rates because of flawed credit scores,” Brown said. “A solid credit score is necessary to keep borrowing costs down.”
How Long Do Homes Take to Sell?
|Home Type||Median Number of Days on the Market|
Regional Existing-Home Sales
|Sales Volume Compared with July 2013||Median Price||Median Price Compared with July 2013|
|Northeast||Down 9.9%||$273,600||Up 2.4%|
|Midwest||Down 4.7%||$175,200||Up 4.1%|
|South||Up 0.5%||$192,000||Up 5.0%|
|West||Down 8.6%||$304,100||Up 6.3%|