Washington, DC, Aug. 25--Driven by strong market fundamentals, existing single-family home sales rose to a record monthly pace in July and prices increased at a double digit rate from a year ago, according to the National Association of Realtors.
Existing-home sales were up 5.0 percent to a seasonally adjusted annual rate of 6.12 million units in July from a pace of 5.83 million units in June; last month's sales activity was 13.8 percent above the 5.38-million unit pace in July 2002. The previous record was a 5.94-million unit rate, set in both December 2002 and January 2003.
David Lereah, NAR's chief economist, said the sales jump is consistent with other housing data, but that rising interest rates stimulated some buyers. "When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher," he said, noting mortgage interest rates have risen a full percentage point from their weekly low. "However, given the strong underlying demand for housing from a growing number of households, it's hard to gauge just how much 'fence jumping' may have accounted for the sales record."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.63 percent in July, up from a record low 5.23 percent in June; it was 6.49 percent in July 2002.
NAR President Cathy Whatley, owner of Buck & Buck Inc. in Jacksonville, FL, said interest rates now appear to be leveling off. "The good news is mortgage interest rates have been moving up and down in a narrow range over the last few weeks, with the 30-year fixed rate averaging less than 6.3 percent," she said. "We think this pattern will continue into 2004, hovering in the range of 6.3 percent. That will preserve favorable affordability conditions and strong home sales, but it will be somewhat slower than the record pace during the first half of this year.
"The national median existing-home price was $182,100 in July, up 12.1 percent from July 2002 when the median price was $162,400. The median is a typical market price where half of the homes sold for more and half sold for less. "That's the strongest national price increase since November 1980, a reflection of tight inventories in a record market," Lereah said.
Housing inventory levels at the end of July dropped 4.4 percent from June to a total of 2.39 million existing homes available for sale, which represents a 4.7-month supply at the current sales pace.
Regionally, existing-home sales in the Northeast increased 7.7 percent in July to a pace of 700,000 units, and were 11.1 percent above July 2002. The median existing-home price in the Northeast was $194,400, up 16.3 percent from a year ago.
The existing-home sales pace in the South rose 7.0 percent in July to an annual rate of 2.45 million units, and were 14.5 percent above a year ago. The median price of an existing home in the South was $177,700, up 17.6 from July 2002.
Existing homes in the Midwest were selling at an annual rate of 1.34 million units in July, up 3.9 percent from June, and were 12.6 percent higher than July 2002. The median price in the Midwest was $147,800, up 5.1 percent from a year ago.
Home resales in the West rose 1.9 percent in July to an annual rate of 1.63 million units, and were 14.8 percent higher than a year earlier. The median existing-home price in the West was $245,100, up 11.7 percent from July 2002.
