Home sales strengthen

The National Association of Realtors (NAR) reported last week that existing sales rose at their fastest rate since last September, indicating the housing market is “bouncing back after a sluggish first half of the year.”

Existing home sales increased 2.4% and have risen for four consecutive months. This surpassed analysts’ estimates despite sales being 4.3% below last year’s level. The chief economist for NAR, Lawrence Yun, attributes the rise in home sales to expanding housing inventories and moderate increases in prices. As a result of these developments, buyers are less hesitant to enter the real estate market.

Single-family home sales increased 2.7% last month while condominium and co-op sales remained unchanged. The Commerce Department reported that U.S. housing starts surged 15.7%, breaking two straight months of declines. The largest sector of the housing market, which is single-family homes, had an 8.3% gain in July.

The available-home inventory increased 3.5% and now represents a 5.5-month supply. A six-month supply of available homes is considered balanced or normal.

The median home price is almost 5% higher than a year ago and Mr. Yun warns that housing affordability is likely to decrease in the coming years.

He states, “Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy.”

Distressed homes (foreclosures and short sales) comprised 9% of July sales. This is down from 15% a year ago. What is notable about this statistic is that it was the first time that distressed sales fell to single-digits since NAR began tracing this housing segment since October 2008.

Further, 6% of home sales were foreclosures that sold at an average discount of 20% below market value, while 3% were short sales that sold an average discount of 14% below market value. This represents a significant milestone as distressed sales comprised 36% of home sales in 2009.

From a regional perspective, existing-home sales in July were as follows:

• In the Northeast existing-home sales were “flat” and remain almost 10% below a year ago and the median price of homes rose 2.4% for the same period.

• In the South existing-home sales increased 3.4% and are up 0.5 point from where they were a year ago. The median price of homes is up 5% for the same period.

• In the Midwest existing-home sales increased 1.7%, but are still 4.7 percentage points lower than a year ago, while the median price increased 4.1% for the same period.

• In the West existing-home sales increased 2.6%, but are 8.6 points below from where they were a year ago, while the median price increased 6.3% for the same period.

• In Greenwich, in the period of August 2013 through July 2014, approximately 1,572 homes have sold, amounting to approximately $3,393,801,000 in sales.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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