Market Trends Newsletter
According to the National Association of Realtors® (NAR) sales of existing homes grew in July for a third straight month, while first-time home-buyer transactions fell to their lowest level since January, likely due to low inventory levels and rising prices.
Total existing-home sales (measuring transactions for single-family homes, townhomes, condominiums and co-ops) grew to 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July, up from a downwardly revised 5.48 million in June. July's sales kept the briskest pace since February 2007 (5.79 million), and have now increased year-over-year for ten straight months and are 10.3 percent higher than a year ago (5.07 million).
NAR's chief economist, Lawrence Yun, indicated that July's sales growth solidifies impressive growth in activity during 2015's peak buying season. According to Yun, "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."
- The median existing-home price (all housing types) in July was $234,000, an increase of 5.6 percent over July 2014. July's price growth marks the 41st consecutive month of year-over-year gains.
- Total housing inventory by the end of July fell 0.4 percent, to 2.24 million existing homes available for sale, and is now 4.7 percent lower than a year ago (2.35 million). Unsold home inventory sits at a 4.8-month supply at the current sales pace, a decline from 4.9 months in June.
- The share of first-time buyers fell in July for a second consecutive month, dropping from 30 percent in June to 28 percent. A year ago, first-time buyers represented 29 percent of all buyers.
MORTGAGE RATES RISE, DISTRESSED SALES FALL
Freddie Mac reports that the average commitment rate for a conventional, 30-year, fixed-rate mortgage rose to 4.05 percent in July from 3.98 percent in June. This is the first time the rate has been above 4 percent since November 2014 (4.00 percent) and the highest since September 2014 (4.16 percent).
Chris Polychron, NAR President, explained that the housing market is in a much improved position and has made great progress since the depths of the recession. "Five years ago, distressed sales represented 33 percent of the market in July," Polychron said. "For many previously distressed homeowners throughout the country, rising home values in recent years have helped recover equity and the vast improvement in several local job markets means fewer are falling behind on their mortgage payments."
Distressed sales fell to the lowest share since NAR began tracking this information in October 2008. Foreclosures and short sales dropped to 7 percent in July from 8 percent in June; a year ago they were at 9 percent. Five percent of July's sales were foreclosures while 2 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in July (15 percent in June), while short sales were discounted 12 percent (18 percent in June).
WARRANTIES FOR OLDER HOMES
New homes come with warranties to protect the buyer in case of the unexpected. But what about existing homes? Fortunately, there are a number of companies today who offer warranties for existing homes. Sellers can now offer their buyers a level of assurance that was previously reserved for new construction, and buyers can buy with confidence!
If you are in the market to buy or sell, ask us about the advantages of a home warranty. You might be surprised at how much protection is offered at a very reasonable price.