Signs Indicate No Drop-Off for Home Sales
It appears existing-home sales won't drop off at the end of the summer, as sales contracts rose modestly in July, reflecting an overall upward trend for the past seven months, according to National Association of REALTORS® data.
Breakdown of Pending Home Sales by Region
- Northeast: rose 4 percent to 98.8 in July, 12.1 percent above a year ago.
- Midwest: held steady at 107.8 last month, 5.7 percent above year-ago levels.
- South: rose 0.6 percent to 124.2, 6.5 percent above July 2014.
- West: dropped 1.4 percent to 103, remain 7.5 percent above year-ago levels.
The housing market has begun the second half of 2015 on an upbeat note, with NAR's Pending Home Sales Index — a forward-looking indicator based on contract signings — inching up 0.5 percent in July to 110.9. It is now 7.4 percent above year-ago levels.
"Led by a solid gain in the Northeast, contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer," says NAR Chief Economist Lawrence Yun. "While demand and sales continue to be stronger than earlier this year, REALTORS® have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust."
Housing inventory shortages likely will persist into the fall, which will also prompt existing-home prices to continue to rise, Yun notes. The national median existing-home price will likely rise 6.3 percent this year to $221,400, according to NAR. Existing-home sales also are expected to rise by 7.1 percent this year, totaling 5.29 million. That's still about 25 percent below the 2005 peak of 7.08 million.
"In light of the recent volatility in the stock market, it's possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment," Yun says. "Overall, the prospects for ongoing strength in the housing market remain intact for now. The U.S. economy is growing — albeit at a modest pace — and the labor market continues to add jobs."
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