Existing home sales show summer gain

Existing-home sales, including single-family, townhomes, condominiums and co-ops, rose 3.1 percent to a seasonally adjusted annual rate of 5 million units in July from a downwardly revised level of 4.85 million in June. Sales are 13.2 percent lower than the 5.76 million-unit pace set in July 2007.

NAR officials, however, expect that the up-and-down pattern may be broken by the newly enacted housing stimulus package.

“Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives,” NAR President Richard F. Gaylord said in a news release. “Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”

The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.

Analysis of NAR price data since 1968 shows home prices normally rise one to two percentage points above the overall rate of inflation, building wealth for the typical period of homeownership.

Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from an 11.1-month supply in June. The rise in supply results from a sharp increase in condo inventory; the single-family supply declined.

According to NAR data, single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level of a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.

Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17 percent lower than July 2007. The median price in the Midwest was $175,400, up 1 percent from a year ago.

NAR will release existing-home sales data for August on Sept. 24.

The level of home sales is expected to show little movement in the months ahead, according to NAR’s latest projections.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, fell 3.2 percent to 86.5 from an upwardly revised reading of 89.4 in June, which had risen 5.8 percent from May. The July index remains 6.8 percent below July 2007, when it was 92.8.

“Pending home sales are oscillating month-to-month, with the long-term trend essentially flat,” said Lawrence Yun, NAR chief economist, in a Sept. 9 news release. “Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

Marketplace ambiguities also are a complicating factor, according to the release.

“Even with the Treasury Department’s direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent,” Yun said.