| 8/23/05 - Existing-home sales declined in July from a
record in June, but home prices continue to rise at double-digit rates,
according to the National Association of Realtors®.
Total existing-home sales - including single-family, townhomes,
condominiums and co-ops - slipped 2.6 percent in July to a seasonally
adjusted annual rate* of 7.16 million from an upwardly revised record of
7.35 million in June. Sales were 4.7 percent higher than the 6.84
million-unit pace in July 2004.
David Lereah, NAR's chief economist, said home sales remain in
historic territory. "The level of existing-home sales in July was
the third highest on record," he said. "This is a big number
any way you slice it, and housing is continuing to stimulate the overall
economy." The second highest level of sales activity ever recorded
was in April of this year, with a pace of 7.18 million units.
The national median existing-home price for all housing types was
$218,000 in July, up 14.1 percent from July 2004 when the median price
was $191,000. The median is a typical market price where half of the
homes sold for more and half sold for less.
Lereah noted that the strongest rates of price growth tend to move
geographically. "In examining the hottest markets for home price
appreciation, we see a rolling boom moving from one metro area to
another over time, as well as a spillover effect into nearby areas with
lower home prices," he said. "This is spreading the wealth of
housing returns, with a natural easing of appreciation in areas
following a period of extraordinary price growth. Even after slowing in
a given area, prices typically have continued to rise faster than
historic norms." Over the last four-and-a-half years of record home
sales, no area that has experienced a sustained period of double-digit
price growth has later seen a price decline.
NAR President Al Mansell of Salt Lake City said the rate of price
growth is a simple reflection of supply and demand. "Housing
inventory levels improved in July, but they're still quite lean by
historic standards," he said. "If the supply of homes rises,
it should reduce competition between buyers and take some of the
pressure off of prices. Even so, we expect home price appreciation to
remain above normal over the next year."
Total housing inventory levels rose 2.6 percent at the end of July to
2.75 million existing homes available for sale, which represents a
4.6-month supply at the current sales pace.
According to Freddie Mac, the national average commitment rate for a
30-year, conventional, fixed-rate mortgage was 5.70 percent in July, up
from 5.58 percent in June; the rate was 6.06 percent in July 2004.
After hitting four consecutive monthly records, existing condominium
and cooperative housing sales declined 5.0 percent to a seasonally
adjusted annual rate of 915,000 units from an upwardly revised level of
963,000 in June. Last month's sales pace remained 8.4 percent above the
844,000-unit level in July 2004. The median condo price was $219,300, up
11.3 percent from a year ago.
Single-family home sales eased by 2.3 percent to a seasonally
adjusted annual rate of 6.24 million in July from an upwardly revised
record of 6.39 million in June, and were 4.0 percent above the 6.00
million-unit pace in July 2004. The median single-family home price was
$217,900 in July, up 14.6 percent from a year ago.
Regionally, total existing-home sales in the South were unchanged in
July, holding at a record level of 2.74 million units, and were 5.0
percent higher than a year earlier. The median price of an existing home
in the South was $187,000, up 7.5 percent from July 2004.
Existing-home sales in the Midwest slipped 1.8 percent to an annual
sales rate of 1.61 million in July, and were 2.5 percent higher than
July 2004. The median price in the Midwest was $178,000, which was 11.9
percent higher than a year ago.
Total existing-home sales in the Northeast declined 3.3 percent to an
annual pace of 1.19 million in July, and were 6.3 percent above the same
month a year ago. The median existing-home price in the Northeast was
$251,000, up 13.1 percent from July 2004.
In the West, existing-home sales fell 7.5 percent to a level of 1.61
million units in July, and were 3.2 percent higher than July 2004. The
median existing-home price in the West was $319,000, up 16.0 percent in
the last year.
* The annual rate for a particular month represents what the total
number of actual sales for a year would be if the relative pace for that
month were maintained for 12 consecutive months. Seasonally adjusted
annual rates are used in reporting monthly data to factor out seasonal
variations in resale activity. For example, home sales volume is
normally higher in the summer than in the winter, primarily because of
differences in the weather and family buying patterns.
Existing-home sales, which include single-family, townhomes,
condominiums and co-ops, are based on transaction closings. This differs
from the U.S. Census Bureau's series on new single-family home sales,
which are based on contracts or the acceptance of a deposit. Because of
these differences, it is not uncommon for each series to move in
different directions in the same month. In addition, existing-home
sales, which generally account for 85 percent of total home sales, are
based on a much larger sample - nearly 40 percent of multiple listing
service data each month - and typically are not subject to large
prior-month revisions. Because there is a concentration of condos in
high-cost metro areas, the national median condo price is higher than
the median single-family price. In a given market area, condos typically
cost less than single-family homes.
Existing-home sales for August will be released September 26. The
next Pending Home Sales Index will be on September 1 and the forecast
will be revised September 7.
Source: The
National Association Of Realtors August 23, 2005
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