After rising in June to their highest pace in over eight years, existing-home sales in the U.S. steadily increased for the third consecutive month in July, according to the latest report from the National Association of Realtors (NAR).
NAR reports that total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.0 percent to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June.
Even more good news for the housing market, home sales in July remained at the highest pace since February 2007 (5.79 million), have now increased year-over-year for ten consecutive months, and are 10.3 percent above a year ago (5.07 million), according to NAR's report.
Lawrence Yun, NAR chief economist, says the increase in sales in July solidifies what has been an impressive growth in activity during this year's peak buying season. "The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now," he said. "As a result, current homeowners are using their increasing housing equity towards the downpayment on their next purchase."
The median existing-home price for all housing types in July was $234,000, which NAR says is 5.6 percent above July 2014. July's price increase marks the 41st consecutive month of year-over-year gains.
"Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," Yun added. "Realtors in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."
Total housing inventory at the end of July declined 0.4 percent to 2.24 million existing homes available for sale, and is now 4.7 percent lower than a year ago (2.35 million). Unsold inventory is at a 4.8-month supply at the current sales pace, down from 4.9 months in June, according to NAR's report.
NAR says that the percent share of first-time home buyers in the market declined in July for the second consecutive month, falling from 30 percent in June to 28 percent — the lowest share since January of this year (also 28 percent). One year ago, first-time buyers represented 29 percent of all home buyers. NAR attributes this decline to "stubbornly low" inventory levels and rising home prices.
"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," said Yun. "Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options."
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage climbed to 4.05 percent in July from 3.98 percent in June — the first time above 4 percent since November 2014 (4.00 percent) and the highest since September 2014 (4.16 percent).