Sales of existing homes fell 1.3 percent in July

Sales of existing homes fell 1.3 percent in July
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Sales of previously owned homes slipped in July to the lowest level of the year as inventory remains low amid increasing buyer demand.

Existing-home sales, which are completed transactions that include single-family homes and townhomes, slipped 1.3 percent to a seasonally adjusted annual rate of 5.44 million last month from 5.51 million in June, the National Association of Realtors said Thursday.

"Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” said Lawrence Yun, NAR chief economist.

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July’s sales pace is 2.1 percent above a year ago, but is the lowest of the year.

Large declines of sales in the Northeast and Midwest outweighed sales increases in the South and West.

The median existing-home price in July was $258,300, up 6.2 percent from July last year, which marks the 65th straight month of year-over-year gains.

Along with rising prices, 30-year mortgage rates ticked up to 3.97 percent in July from 3.90 percent in June, which is making housing less affordable. 

“Home prices are still rising above incomes and way too fast in many markets,” Yun said.

On top of higher prices and loan rates, housing inventory last month fell 1 percent, to 1.92 million existing homes available for sale, and is now 9 percent lower than a year ago.

Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.8 months a year ago.

Still, demand for homebuying is there. 

Listings in July typically went under contract in less than 30 days for the fourth consecutive month.

"This speaks to the significant pent-up demand for buying rather than any perceived loss of interest," Yun said.

First-time buyers were 33 percent of sales in July, which is up from 32 percent both in June and a year ago.

Distressed sales — foreclosures and short sales — were 5 percent of sales in July, up from 4 percent in June and unchanged from a year ago. 

Single-family home sales decreased 0.8 percent, to a seasonally adjusted annual rate of 4.84 million in July from 4.88 million in June, but are still 1.7 percent above the 4.76 million pace a year ago.

Regionally, existing-home sales fell 14.5 percent in the Northeast and 5.3 percent in the Midwest.

In the South, sales were up 2.2 percent while purchases jumped 5 percent in the West.