Real Estate Market

September 2015

Existing Home Sales Report

According to the National Association of Realtors® (NAR) sales of existing homes grew in July for a third straight month, while transactions by first-time home-buyers fell to their lowest level since January, probably due to continuing low inventory levels and rising prices.

Total existing-home sales (which measures transactions for single-family homes, townhomes, condominiums and co-ops) grew to 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July, up from a downwardly revised 5.48 million in June. July's sales kept the briskest pace since February 2007 (5.79 million), and have now increased year-over-year for ten straight months and are 10.3 percent higher than a year ago (5.07 million).


Existing Home Sales By Region

NAR's chief economist, Lawrence Yun, indicated that July's sales growth solidifies an impressive growth in activity during 2015's peak buying season. According to Yun, "The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now." NAR's chief economist added that "As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase."

Key Takeaways

  • The median existing-home price (for all housing types) in July was $234,000, representing an increase of 5.6 percent over July 2014. July's price growth marks the 41st consecutive month of year-over-year gains.
  • Total housing inventory by July's end fell 0.4 percent, to 2.24 million existing homes available for sale, and is now 4.7 percent lower than a year ago (2.35 million). Unsold home inventory sits at a 4.8-month supply at the current sales pace, a decline from 4.9 months in June.
  • The share of first-time buyers among overall transactions fell in July for a second consecutive month, dropping from 30 percent in June to 28 percent. A year ago, first-time buyers represented 29 percent of all buyers.

Mortgage Rates & Falling Distressed Sales

Freddie Mac reports that the average commitment rate for a conventional, 30-year, fixed-rate mortgage rose to 4.05 percent in July from 3.98 percent in June. This is the first time the rate has been above 4 percent since November 2014 (4.00 percent) and the highest since September 2014 (4.16 percent).

Chris Polychron, NAR President, explained that the housing market is in a much improved position and has made great progress since the depths of the recession. "Five years ago, distressed sales represented 33 percent of the market in July," Polychron said. "For many previously distressed homeowners throughout the country, rising home values in recent years have helped recover equity and the vast improvement in several local job markets means fewer are falling behind on their mortgage payments."

Distressed sales fell to the lowest share since NAR began tracking this information in October 2008. Foreclosures and short sales dropped to 7 percent in July from 8 percent in June; a year ago they were at 9 percent. Five percent of July's sales were foreclosures while 2 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in July (15 percent in June), while short sales were discounted 12 percent (18 percent in June).

Warranties for Older Homes

New homes come with warranties to protect the buyer in case of the unexpected. But what about existing homes? Fortunately, there are a number of companies today who offer warranties for existing homes. Sellers can now offer their buyers a level of assurance that was previously reserved for new construction, and buyers can buy with confidence!

If you are in the market to buy or sell, ask us about the advantages of a home warranty. You might be surprised at how much protection is offered at a very reasonable price.

 

Contact Information

Photo of Robert Wolf - Broker / salesperson Real Estate
Robert Wolf - Broker / salesperson
Prominent Properties/Sotheby's International
55 North Maple Ave
Ridgewood NJ 07450
Cell: 551-206-1163 / Office 201-639-5555
Office: 201-639-5555