Contract closings were on the up last month, according to NAR
The existing-homes market saw a slight uptick in activity last month thanks mainly to a slower pace of price growth and lower mortgage rates.
The National Association of Realtors (NAR) said Thursday that contract closings hit an annualized rate of 4.01 million in July, up 2% from the month before, with median prices rising by just 0.2% year over year.
Inventory rose to 1.55 million units, an increase of 0.6% compared with June but significantly higher (15.7%) than the same time last year. Sales moved higher monthly in the Northeast, South and West, and dropped in the Midwest.
Mortgage rates have fallen in recent weeks, but Keller Williams chief economist Ruben Gonzalez said more consistent drops are needed for housing market activity to pick up further.
“Unless mortgage rates move lower and stay there, the housing market will remain slow and regionally uneven, with locked-in sellers and rising inventory limiting both appreciation and the pace of home sales,” Gonzalez wrote.
The NAR’s chief economist Lawrence Yun said the higher sales were spurred by an “ever-so-slight” improvement in housing affordability. “Wage growth is now comfortably outpacing home price growth, and buyers have more choices,” he said. “Condominium sales increased in the South region, where prices had been falling for the past year.”
About half the country is now seeing real estate price reductions, Yun suggested, with homeowners faring well despite wider economic volatility. “Only 2% of sales were foreclosures or short sales,” he said, “essentially a historic low. The market’s health is supported by a cumulative 49% home price appreciation for a typical American homeowner from pre-COVID July 2019 to July this year.”
But affordability remains stretched for scores of American homebuyers despite the improving conditions. While average price growth slowed in July, prices have now increased for 25 consecutive months – and the share of first-time homebuyers continues to slide.
In June, 30% of buyers were purchasing for the first time. That percentage dipped to 28% last month as the share of cash sales rose (to 31%, up from 29% a month before).
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