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Existing-Home Sales Rise in July, Just Shy of Expectations

Existing homes sale rose to an annual rate 4.47 million in July, the ""National Association of Realtors"":http://www.realtor.org/ reported Wednesday.

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Economists had expected the sale pace to be 4.51 million. The median price of an existing home though fell in July for the first time since January.

The median price of an existing home fell $1,500, 0.8 percent, from June to $187,300. The median price was up year-over-year for the fifth straight month in July, $16,100 or 9.4 percent from July 2011 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the strongest year-over-year gain since January 2006.

Even with the improvement in the sales rate, NAR chief economist Lawrence Yun said the sales pace was far below what it should be.

Given population and demographic demand, Yun said existing-home sales could be in a normal range of 5 to 5.5 million if all conditions were optimal.

├â┬ó├óÔÇÜ┬¼├àÔÇ£Sales may reach 5 million next year, but it will require more sensible lending standards and stronger job creation to push beyond that,├â┬ó├óÔÇÜ┬¼├é┬Ø he said.

The increase in the July sales rate ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 100,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô was less than half of the 250,000 drop in the sales pace registered for June.

The 2.3 percent month-month increase was also less than the 5.4 percent increase in the pending-home sales index for May suggesting borrowers who entered into contracts in May (which would have closed in July) cancelled agreements to buy.

With the month-over-month increase in sales, existing home sales

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continued the steady uphill climb from the cyclical tough of a sales pace of 3.39 million in July 2010.

In the last six months sales have averaged 4.525 million compared with 4.403 million in the previous six months and 4.177 million in the six months before that.

The inventory of homes for sale rose to 2.4 million in July ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 23.8 percent below the year-earlier level - from 2.37 million in June.

With the month-over-month increase in the sales pace, the months' supply of existing homes on the market dipped to 6.4 months, well below the cyclical peak of 12.4 months in July 2010.

At 6.4 months, the supply is just below the 6.5 month long term average dating back to January 1999 when the NAR reports began.

Distressed homes ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô foreclosures and short sales sold at deep discounts ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô accounted for 24 percent of July sales (12 percent were foreclosures and 12 percent were short sales), the NAR said, down from 25 percent in June and 29 percent in July 2011.

Foreclosures, according to the NAR report, sold for an average discount of 17 percent below market value in July, while short sales were discounted 15 percent.

Regionally, existing-home sales in the Northeast rose 7.4 percent to an annual level of 580,000 in July and are 13.7 percent above July 2011. The median price in the Northeast was $254,200, up 3.5 percent from a year ago.

Existing-home sales in the Midwest increased 2.0 percent in July to a pace of 1.04 million and are 16.9 percent higher than a year ago.

The median price in the Midwest was $154,100, up 5.8 percent from July 2011.

In the South, existing-home sales rose 2.3 percent to an annual level of 1.77 million in July and are 8.6 percent above July 2011.

The median price in the region was $162,600, up 6.6 percent from a year ago.

Existing-home sales in the West were unchanged at an annual pace of 1.08 million in July but are 5.9 percent higher than a year ago.

With pronounced inventory shortages, the median price in the West was $238,600, a jump of 24.5 percent from July 2011.

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