Sales of existing homes, including single-family, condominiums and coops, jumped 7.2% to a seasonally adjusted annual rate of 5.24 million units in July, the fourth straight month of gains and 5% above the rate of July, 2008. The news prompted Lawrence Yun, the chief economist for the National Association of Realtors, to proclaim, "The housing market has decisively turned for the better."
The NAR said the last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005. It also said the 7.2% gain was the highest monthly increase since the current existing-home sales data series was begun in 1999.
Single-family sales rose a slightly more modest 6.5% to a seasonally adjusted annual rate of 4.61 million, also 5.0 percent higher than a year ago. Condo and coop sales rose 12.5% to a rate of 630,000.
However, inventory of unsold homes climbed 7.3% in July to 4.09 million, a 9.4-month supply at the current sales pace, which held even with June due to the magnitude of the July increase. Raw inventory totals were 10.6% lower than a year ago.
Prices continued falling, with the national median existing-home price down 15.1% from last July to $178,400 in July. The single-family home median price was down 14.6% to $178,300. The median condo/coop price fell 18.9% to $178,800.
First-time home buyers accounted for 30% of transactions in July, the NAR said, and distressed properties made up 31% of sales. "In addition to first-time buyers, we¹re also seeing increased activity by repeat buyers,"said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. "While many entry-level buyers are focused on the discounted prices of distressed homes, they're also freeing some existing owners to sell and make a move."
Regionally, the Northeast surged 13.4% to pace of 930,000 in July, 3.3% percent higher than July 2008, with the median price off 15% to $236,700.The Midwest jumped 10.9% to a level of 1.22 million, 8.0% above a year ago, and the median price dropped 5.9% to $157,200. The South was up 7.1% to an annual pace of 1.95 million, 5.4% ahead of July 2008, with the median price down 7.1% to $164,500. Sales in the West fell 1.7% to a rate of 1.13 million, 1.8% above last July, with the median price down 28% to $202,300.
J.P. Morgan Securities home-building analyst Michael Rehaut said in a research note that while he saw the sales gain as a positive, the increasing inventory numbers were a concern. "While months' supply remains flat at 9.4, given that home sales and inventories rose at a similar rate, we are more concerned with the rise in absolute inventories, given our view that a high level of foreclosures in 2H09, combined with a still highly elevated overall level of housing inventory, remains the biggest risk to home prices over the next 6-12 months," he wrote. He said he expects further downside risk to the home builder group and more impairment charges in the second half. He added, "Given a still relatively weak macro environment, featuring continued job losses and a more tentative consumer, we do not expect continued strong growth in 2H09 for existing home sales."