The Economy

Home Sales Continue to Rise; Prices Dip Slightly

'The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices ... is encouraging more households to buy.'
Katie Kuehner-HebertAugust 20, 2015
Home Sales Continue to Rise; Prices Dip Slightly

Existing-home sales rose for the third straight month in July, while “stubbornly low” inventory levels and rising prices are likely to blame for sales to first-time buyers falling to their lowest share since January, according to the National Association of Realtors.

Total existing-home sales rose 2% last month, to a seasonally adjusted annual rate of 5.59 million, from a downwardly revised 5.48 million in June. Sales in July have now increased year-over-year for ten consecutive months and remained 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,” NAR chief economist Lawrence Yun said in a press release. “As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase.”

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The median sale price for a previously owned home slipped slightly in July to $234,000, from June’s $236,300, but was still 5.6% higher than a year earlier. Meanwhile, total housing inventory at the end of July fell 0.4%, to 2.24 million existing homes available for sale, and is now 4.7% lower than a year ago. Unsold inventory is at a 4.8-month supply at the current sales pace, down from 4.9 months in June.

The percent share of first-time buyers declined in July for the second consecutive month, falling from 30% in June to 28% — the lowest share since January. A year ago, first-time buyers represented 29% of all buyers.

“Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options,” Yun said.

According to Freddie Mac, the average rate for a 30-year, conventional, fixed-rate mortgage climbed to 4.05% in July, from 3.98% in June, NAR said.

“Mortgage rates are still low by historical standards, but could rise in the fall if the Federal Reserve raises interest rates,” Wall Street Journal/Dow Jones wrote.