Sales of previously owned U.S. homes increased in July to a five-month high, underscoring stability in the residential real estate market that may be starting to get a boost from falling borrowing costs.
Contract closings rose 2.5 per cent to a 5.42 million annual rate, the National Association of Realtors said Wednesday. That compares with the median forecast of 5.40 million pace projected by economists in a Bloomberg survey. The median sales price increased 4.3 per cent from a year earlier to US$280,800.
- Declining mortgage rates, smaller annual home price gains and robust labor conditions are laying the ground for a pickup in sales in the second half of 2019. At the same time, the market is being constrained by a shortage of inventory at the lower end of the market, likely limiting sales to first-time buyers.
- The figures are consistent with recent figures that suggest the housing sector is slowly improving. The latest housing starts data showed construction of single-family homes increased to the highest level since January, while building permits also increased.
- The July gain reflected “incredibly low mortgage rates and strong job market conditions,” Lawrence Yun, NAR’s chief economist, said at a briefing in Washington. Tepid sales during the first half of the year will probably be reversed by December, he said.
- The annualized pace of June existing home sales was revised to 5.29 million from 5.27 million.
- Home sales improved in three of the four U.S. regions, led by an 8.3 per cent surge in the West; the 1.18 million pace in the West was the strongest in a year.
- Properties typically remained on the market for 29 days, while 51 per cent of homes sold in July were on the market for less than a month.
- At the current pace, it would take 4.2 months to sell all the homes on the market, compared with 4.4 months in June; Realtors see anything below five months of supply as a sign of a tight market.
- First-time buyers made up 32 per cent of sales in July, down from 35 per cent the previous month.
- Home-price appreciation has been much stronger in the lower-price tier, reflecting lean inventory in that segment, the NAR said.
- Existing-home sales account for about 90 per cent of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are counted when contracts are signed and will be released Friday.
--With assistance from Jordan Yadoo.