Sales of previously owned U.S. homes rose in July for a second month, indicating firmer housing demand as inventory constraints showed signs of easing.
Contract closings increased 2% from the prior month to an annualized 5.99 million, a four-month high, according to figures from the National Association of Realtors on Monday. The median forecast in a Bloomberg survey of economists called for a 5.83 million rate in July.
The data suggest that low borrowing costs and demand for more space continue to underpin home purchases for those with the opportunity and wherewithal to trade up.
The limited number of homes for sale has been an ongoing headwind for the housing market, driving up asking prices and weighing on affordability. An increase in July inventory is typical this time of year, the NAR said.
“The housing sector appears to be settling down,” Lawrence Yun, the NAR’s chief economist, said on a conference call. The number of homes available, a key factor for the housing recovery, is showing small increases, he said.
The median selling price of a previously owned home rose 17.8% from a year ago to $359,900 in July.
High home prices have been restraining demand. Consumers’ views of home buying conditions in early August were the most negative on record, according to a University of Michigan survey of consumer confidence.
There were 1.32 million homes for sale last month, up 7.3% from the prior month and the most since October. Still, inventory is well below the level a year ago. At the current pace, it would take 2.6 months to sell all the homes on the market. Realtors see anything below five months of supply as a sign of a tight market.
Properties remained on the market for an average of just 17 days in July, unchanged from a month earlier. Almost 90% of the homes sold last month were on the market for less than a month, the NAR said.
All-cash sales accounted for 23% of transactions in July, up from 16% a year ago and further illustrating the scramble to purchase in a hot housing market.
“Much of the home sales growth is still occurring in the upper-end markets, while the mid- to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available,” Yun said in a statement.
Digging deeper
- Sales of previously owned single-family homes increased 2.7% last month to a 5.28 million pace.
- Existing condominium and co-op sales fell 2.7% in July.
- Three of four regions in the U.S. posted sales gains last month, led by strength in the Midwest. Purchases also increased in the West and South
- Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and will be released Tuesday.
