Steel Markets

Existing Home Sales up 2.4% But Still Lagging 2013 Sales

August 21, 2014

Existing home sales rose 2.4 percent in July to a seasonally adjusted annual rate of 5.15 million units, the highest pace in 2014. However, sales still lag behind last year’s peak level in July 2013 of 5.38 million units.

Stronger job growth and improving inventory conditions is behind slowly growing sales momentum, said Lawrence Yun, National Association of Realtors chief economist.

“The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market,” said Yun. “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise.”

Yun does warn that affordability is likely to decline in upcoming years. “Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy,” he said.

The median existing home price for all types grew 4.9 percent y/y to $222,900. Single family home prices rose 5.2 percent y/y to $223,900. Sales for single family homes increased 2.7 percent to an annual rate of 4.66 million, 4.2 percent below the July 2013 rate.

Condo and co-op sales were unchanged at an annual rate of 600,000. Distressed home sales were at the lowest level since October 2008 at 9 percent of July sales.

Inventory at the end of July was up 3.5 percent to 2.37 million units for sale—a 5.5 month supply at the current sales pace.

Fannie Mae cut its housing outlook for 2014 after citing generally “disappointing housing activity seen during the first half of the year.” Total sales for 2014 are expected to be below 2013 figures. Sales in 2015 will be stronger according to Fannie Mae chief economist Doug Duncan, but “will not be the breakout year some are expecting.”