Washington, DC, July 25--Existing home sales surpassed market expectations and reached another record in June as low mortgage interest rates and favorable market conditions continued to attract buyers, according to the National Association of Realtors.
Total existing home sales – including single family, townhomes, condominiums and co-ops – rose 2.7 percent in June to a seasonally adjusted annual rate of 7.33 million from an upwardly revised pace of 7.14 million in May. Sales were 4.4 percent above the 7.02 million-unit level in June 2004; the previous record was 7.18 million in April of this year.
David Lereah, NAR’s chief economist, said home sales were expected to ease slightly from peaks reached over the last couple of months. "Just when you think sales activity is ready to settle into a more sustainable pace, the housing market continues to surprise," he said. "We’ve been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.58 percent in June, down from 5.72 percent in May; the rate was 6.29 percent in June 2004. "Job growth and economic improvement also are boosting home sales," Lereah said.
The national median existing-home price for all housing types was $219,000 in June, up 14.7 percent from June 2004 when the median price was $191,000; this is the strongest increase since November 1980 when annual appreciation was 15.6 percent. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR president Al Mansell, of Salt Lake City, said home sales are expected to ease as the year progresses. "When the housing market eventually slows from red-hot levels, we should see some cooling in price gains," he said. "Home prices continue to be bid-up in tight markets across the country. Eventually, appreciation rates will slow and come down to normal levels when the shortage of homes on the market improves and comes closer into balance, hopefully, by the second half of next year."
Historically, home prices rise at the general rate of inflation, plus one-to-two percentage points.
Total housing inventory levels rose 3.8 percent at the end of June to 2.65 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace. "The irony is that housing inventory is tight enough to boost prices but not enough to curb overall sales," Mansell said.
Existing condominium and cooperative housing sales hit a fourth consecutive monthly record in June, rising 4.5 percent to a seasonally adjusted annual rate of 960,000 units from a pace of 919,000 in May. Last month’s sales activity was 12.4 percent above the 854,000-unit level in June 2004. The median condo price was $223,500, up 14.8 percent from a year earlier. Condo/co-op sales accounted for a 13.1 percent market share.
Single-family home sales increased 2.4 percent to a record seasonally adjusted annual rate of 6.37 million in June from 6.22 million in May, and were 3.2 percent above the 6.17 million-unit pace in June 2004. The median single-family home price was $218,600 in June, up 14.5 percent from a year ago.
