The National Association of Realtors (NAR) reported that existing home sales rose 2.5% in July and are up 0.6% from last year.
“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s Chief Economist.
Yun, however, noted that the inventory for affordable housing is “severely low,” and that shortage has caused home prices to rise.
Housing inventory for the month fell to 1.89 million from 1.92 in June, and a year-over-year drop of 1.6%. Unsold inventory is currently at a 4.2-months supply, a slight decline from June’s supply of 4.4 months.
The NAR states that of the home sold in 2018 that were purchased in 2012 in larger metro areas, the lower half of the market increased by more than 100% in the following markets: Atlanta-Sandy-Springs-Roswell, Georgia (165%); Denver-Aurora-Lakewood, Colorado (103%); Miami-Fort Lauderdale, Florida (119%); and Tampa-St. Petersburg-Clearwater, Florida (125%).
Average-home prices for the upper half of the market in the same metros in 2012 grew at a slower pace when sold in 2018.
“Clearly, the inventory of moderately-priced homes is inadequate and more home building is needed,” Yun said . “Some new apartments could be converted into condominiums thereby helping with the supply, especially in light of new federal rules permitting a wider use of Federal Housing Administration (FHA) mortgages to buy condo properties.”
According to the report, the median existing-home price for all housing types in July was $280,800, which is a 4.3% increase from last July and the 89th-consecutive month of annual gains.
The NAR states that first-time buyers were responsible for 32% of all sales in July—a decline from 35% in June but unchanged when compared to July 2018.
Investors, or second-home buyers, purchased 11% of homes for the month, marking a marginal increase from June’s 10%, but down from last year’s 12%. All-cash sales accounted for 19% of July’s transactions.
"Present rates have opened the market for a number of potential buyers who couldn’t afford a home just a year ago,” said NAR President John Smaby. “Additionally, NAR has been working with the FHA for years to establish new condominium loan policies. Our hard work has paid off, and this change will begin benefiting buyers, sellers and our members as soon as this fall.”