New & Existing Home Sales
The Department of Commerce reported July sales of new homes dropped by 2.40 percent from June and down for the third straight month. June’s reading of 406,000 new homes sold was revised up to 422,000 new homes sold; last month’s expectations were based on the original reading. Three of four regions posted a slower rate of growth for home prices with only the South posting a gain.
The average price of a new home in the U.S. rose to $269,800, which is 2.90 percent higher than June’s average home price.
Inventories of new homes increased to a six-month level based on current sales pace. This was the highest inventory of new homes available since 2011. The good news in the numbers are that new home sales increased by 12.90 percent year-over-year in July.
The National Association of REALTORS® reported that July sales of previously-owned homes rose from June’s revised figure of 5.03 million sales to 5.15 million sales and achieved the best reading for 2014. Existing home sales were 4.30 percent lower than for July 2013, which had the highest reading for existing home sales in 2013.
Lawrence Yun, chief economist for the NAR, said that a growing inventory of available pre-owned homes for sale and strengthening labor markets contributed to sales growth. He also said that July’s pace of sales was expected to continue based on mortgage rates holding steady and rising rents. Rising mortgage rates and increasing home prices were cited as factors that could cool existing home sales in coming months.
The Federal Reserve is on target to complete its asset purchase program in October and increases to the Fed’s federal funds rate are expected within months.
Home prices continue to rise as wages grow at a slower pace than home prices. The national median price for existing homes was $222,900, which was a year-over-year increase of 4.90 percent. This was the 29th consecutive month for year-over-year price gains for existing homes. The inventory of existing homes for sale increased by 3.50 percent to 2.37 million available homes and represents a 5.50 month supply. Unsold inventory of existing homes is 5.80 percent higher year-over-year. As compared to July 2013′s reading of 2.24 million available pre-owned homes.
Homes sold through foreclosure or short sales have steeply declined from 36 percent of existing home sales in 2009 to approximately 9 percent in July and were down from 15 percent of existing home sales in June.