The National Association of Realtors reported sales of existing homes rose 24.7% from June to July this summer. July of this year sales were up 8.7% higher than they were this time last year. According to NAR that is the strongest monthly gain in the history of the survey.
When looking at sales, the NAR says the numbers they report include closed sales. The high numbers are stemmed from a lack of inventory, rising prices and record low mortgage rates.
“The new listings are running a little higher than one year ago but all those new listings are being grabbed by the buyers and taken off the market,” said Lawrence Yun, chief economist for the Realtors.
Home inventory was reported to have only 1.5 million homes for sale at the end of July. It was reported that the supply of existing homes for sale decreased to 21.1% annually. At the beginning of the year, there was a 4.2-month supply at the current sales pace but with this drop, the sales pace went down to just a 3.1-month supply. This is the lowest reported since the National Association of Realtors began the survey in 1982.
Since the supply is low and demand is up, the median price of a home was also up in July 8.5% annually. The lack of inventory increased the median price of homes sold to $304,100. This is also a record high price much like the prices seen during the bubble in 2006.
Record low-interest rates are also fueling the market. Potential homebuyers have a lot more purchasing power and can afford a bigger purchase price with such low rates. The average 30-year fixed mortgage is below 3% as reported in July.
Low rates coupled with high homebuilder sentiment has been positive for the industry. August saw a record high score on the National Association of Home Builder’s monthly index. Homebuilders are benefitting from strong buyer demand and inventory shortage.
“I think there is a big societal change concerning housing decisions today,” said Yun. “The upper-income bracket has been more stable in terms of jobs, and they are taking advantage of record-low mortgage rates.”
Click Here For the Source of the Information.