RTTNews - Existing home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors on Friday, with home sales rising for the fourth consecutive month.
The report showed that existing home sales rose 7.2 percent to an annual rate of 5.24 million units in July from a 4.89 million-unit rate in June. Economists had been expecting a more modest increase to a 5.0 million-unit rate.
The housing market has decisively turned for the better, said Lawrence Yun, NAR chief economist. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales.
NAR noted that the increase in sales was the largest monthly gain on record for the total existing-home sales series dating back to 1999.
With the increase, existing home sales rose for the fourth consecutive month, the first four-month winning streak since June of 2004.
Existing home sales were also up 5.0 percent compared to the 4.99 million-unit rate seen in the same month last year, marking the first year-over-year growth since November of 2005.
The report also showed that total housing inventories at the end of July were up 7.3 percent from a month ago at 4.09 million existing homes available for sale. This represents 9.4 months of supply at the current sales pace, unchanged from June because of the strong sales growth.
NAR added that the national median existing-home price was $178,400 in July, which is 15.1 percent lower than in July 2008. The year-over-year decline in prices comes amid sales of distressed properties, which typically sell for 15 to 20 percent less than traditional homes.
On a regional basis, existing home sales in the Northeast and Midwest showed notable increases compared to the previous month, jumping by 13.4 percent and 10.9 percent, respectively.
While existing home sales in the South also increased by 7.1 percent in July, existing home sales in the West slipped 1.7 percent.
Commenting on the data, Peter Boockvar, equity strategist for Miller Tabak, said, Bottom line, there is no question that the housing market is showing continued signs of bottoming but this is the busy season and the $8000 credit has been a big help to the lower end of the housing market.
The question now, based on the Q2 delinquency data yesterday, is what happens to the prime area of the market looking out over the next few quarters, Boockvar added.
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