Home sales, prices rise – but for how long?
Sales of existing homes rose in July to their highest level in three years, with year-over-year prices again showing double-digit increases.
The number of sales was 6.5% above June and 17.2% above the level in July 2012. If sales continue at the same pace, that would equal 5.39 million homes sold annually, according to figures from the National Association of Realtors.
Rising interest rates as well as rising prices are expected to tamp down both prices and the number of sales in coming months, as homes get less affordable. The shortage of homes for sale, particularly for first-time buyers, continues in many communities, too.
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"Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," Lawrence Yun, the NAR’s chief economist, said in a news release. "The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers."
The national median home price, including single-family and condos, was $213,500. That’s 13.7% above the national median price a year ago and only 7.3% below the peak of $230,400 in July 2006.
The number of homes for sale increased 5.6% from June, to 2.28 million, which is a 5.1-month supply at the current rate of sales. The number of homes for sale is 5% less than a year ago.
Distressed homes continued to make up a smaller percentage of sales, one of the factors that is driving up median prices, since foreclosures and short sales sell at a discount. In July, distressed homes were 15% of sales, down from 24% a year ago.
First-time buyers continued to play a smaller role in the market than they do in normal times, accounting for only 29% of sales, down from 34% a year ago. Investors made 16% of purchases, down from a peak of 22% in February.
All-cash sales continued to be a strong factor, making up 31% of the deals, up from 27% a year ago.
Looking at the numbers by region:
Northeast: Sales up 20.3% from July 2012, median price up 6.7%.
Midwest: Sales up 20.8% from July 2012, median price up 9.5%.
South: Sales up 16.6% from July 2012, median price up 13.6%.
West: Sales up 13.2% from July 2012, median price up 19.2%.
By Teresa at MSN Real Estate