A home for sale will be on display in Houston, Texas on August 12, 2021.
Brandon Bell | Getty Images
Existing home sales rose 2% in July from June to a seasonally adjusted, annualized rate of 5.99 million units, according to the National Association of Realtors.
These sales figures are based on deals, so they reflect the contracts signed in May and June. Sales were 1.5% higher than July 2020. This is the second straight month of profits after a spring pullback.
Sales are likely to improve due to increasing supply. The housing stock was 1.32 million at the end of July, 12% less than last year, but that is a smaller annual decrease than in recent months. At the current sales speed, this corresponds to a 2.6-month offer. A six month offer is considered a balanced market between buyers and sellers.
Despite the slight increase in supply, demand continued to outperform it, pushing prices to another all-time high.
The average price of an existing home sold in July was $ 359,900. That’s a 17.8% increase from July 2020. Some of that price hike is skewed by the types of properties currently being sold, and the market is much more active at the top. Annual price gains were bigger last month, but given the huge surge in the market last summer, comparisons will be smaller now.
“The housing sector appears to be calming down,” said Lawrence Yun, brokers’ chief economist. “The market is less heated than before.”
It may be cool, but it still seems competitive. Households spend an average of only 17 days on the market. First-time buyers only made up 30% of the market, while historically they typically made up around 40%. Almost a quarter of all buyers only use cash, even a higher proportion than normal.
The latest June sales of newly built homes showed a sharp decline both monthly and annually, according to the US Census. This dataset is based on signed contracts, so it looks at roughly the same activity as the July data on existing homes. Newly built homes have a mark-up on existing homes of similar size, and builders say they are now seeing even more buyers who cannot afford what they want.
Mortgage rates didn’t move much in May and June when most of these deals were done, but they fell more sharply in July. In addition to increasing supply, this could help to at least slightly boost sales in the coming months. However, mortgage applications for a home purchase are still moving much slower than they were a year ago, according to the Mortgage Bankers Association.
“Sustained economic recovery is key to maintaining sales momentum, and anything that disrupts progress, such as rising Covid cases, could upset home sales,” said Danielle Hale, chief economist at Realtor.com. “Still, as market price growth begins to re-calibrate in response to changing supply and demand dynamics, we should see a steady pace in home sales over the next few months, especially if mortgage rates stay low.”