Although existing home sales rose 1.7% on a seasonally adjusted basis in August, according to the National Association of Realtors (NAR), they may have temporarily ‘peaked’ due to rising mortgage rates, its chief economist says.
‘Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions,’ says Lawrence Yun, chief economist for the NAR. ‘Tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn't as favorable as it was, and restrictive mortgage-lending standards are keeping some otherwise qualified buyers from completing a purchase.’
Existing-home sales in August reached the highest level since February 2007, when they hit 5.79 million, according to the NAR's existing home sales report. Roughly 5.48 million homes were sold, up from 5.39 million in July and up 13.2% from the 4.84 million sold in August 2012.
Total housing inventory at the end of August increased 0.4% to 2.25 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, down from a five-month supply in July. Unsold inventory is 6.3% below a year ago, when there was a six-month supply.Â
‘Limited inventory in some areas means multiple bidding remains a factor; 17% of all homes sold above the asking price in August, although 63% sold below list price,’ Yun notes.
Metro areas seeing the largest year-over-year declines in inventory in August included Naples, Fla., down 23.5%; Detroit, down 23.3%; and Boston, down 20.7%, according to the report.
The national median existing-home price for all housing types was $212,100 in August, up 14.7% from August 2012 – the strongest year-over-year gain since October 2005, when the median rose 16.6%. August marked the 18th consecutive month of year-over-year price increases, according to the NAR.
Foreclosures and short sales accounted for about 12% of August sales, down from 15% in July and down significantly from 23% in August 2012. More precisely, foreclosures represented 4% of sales for August while short sales represented 8%.Â
Foreclosures sold for an average discount of 16% below market value in August, while short sales were discounted 12%.
‘As the equity position of most homeowners continues to improve, some who have been on the sidelines will list their home for sale,’ says Gary Thomas, president of the NAR. ‘Most of those owners also will be buying another home, but higher levels of new home construction going into 2014, combined with some reduction in demand from less favorable affordability conditions, will help to moderate price growth to more sustainable levels.’
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