Existing-home sales rose 7.2% to a seasonally adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June, although distressed sales made up 31% of transactions, according to the National Association of Realtors (NAR).
‘The housing market has decisively turned for the better,’ says NAR Chief Economist Lawrence Yun. July's monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999.
In markets such as San Diego, Las Vegas, Phoenix and Orlando, the demand for distressed – and thereby discounted – properties has spiked, "and a lack of inventory is becoming a common complaint," Yun says.
Total housing inventory at the end of July rose 7.3% to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, which was unchanged from June because of the strong sales gain, NAR says.
The national median existing-home price for all housing types was $178,400 in July, which is 15.1% lower than July 2008. Broken down by region, the median existing-home price decline was most drastic in the West. The median price was $202,300 in July – 28% below the July 2008 level.
"There is actually very little good news in today's housing report," states Andrew Jakabovics, associate director for housing and economics at the Center for American Progress. He points to the fact that 532,000 existing homes were sold in July – up 11,000 from June. That equals an average increase of 220 home sales per state.
"Is that more activity than in June? Yes, but it hardly seems to be evidence that the worst is behind us, especially considering foreclosure activity in July also hit a new record high," Jakabovics says, adding that the high percentage of distressed sales makes it difficult for families to sell their nondistressed properties at anything better than fire-sale prices.