We’re on Month 3 for the continuing rise of existing-home sales, according to a report by the National Association of Realtors® that came out on Thursday. Completed sales of single-family homes, townhomes, condominiums, and co-ops in July were up 2% from June, their highest pace since February 2007, with a year-over-year increase for 10 consecutive months, and 10.3% more than a year ago.
You’ve probably come to expect the reason: “stubbornly low inventory levels,” according to NAR.
But here’s a surprising tidbit. Two months ago we wrote that “first-time home buyers helped push home sales in May to their highest level since May 2009,” but Thursday’s report says that low inventory, and those soaring prices, “are likely to blame for sales to first-time buyers falling to their lowest share since January.”
You’re more likely to buy a home, it seems, if you already have one.
“Current homeowners are using their increasing housing equity towards the down payment on their next purchase,” said Lawrence Yun, NAR chief economist.
The share of first-time buyers dropped from 30% in June to 28% in July, matching the year’s low point in January.
“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,” Yun said. “Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options.”
It’s OK, first-timers: More homes are coming soon.
“We are seeing listings grow through the summer and into August, and single-family starts are now substantially higher,” said Jonathan Smoke, chief economist ofrealtor.com®. But despite a marginal increase in supply, he added, “demand is growing faster—that’s why the market remains tight.”
And tight means higher prices. The median existing-home price for all housing types in July represented a 5.6% year-over-year gain, to $234,000; that’s the 41st consecutive month of year-over-year increases.
That leaves us with a confusing calculation. More homes mean, in theory, a shallower price increase, but prices are already so high that demand could waver.
“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,” reported NAR.
But the shift is also seasonal. As Smoke said, “Summer is a peak sales time, especially for families who want to close and move before school starts.”
Northeast: July existing-home sales down 2.8% to an annual rate of 700,000, up 9.4% from a year ago. The median price was $277,200, 1.3% more than July 2014.
Midwest: July existing-home sales unchanged from June with an annual rate of 1.32 million, up 10.9% from a year ago. The median price was $186,500, 6.6% more than July 2014.
South: July existing-home sales up 4.1% to an annual rate of 2.29 million, up 9.6% from a year ago. The median price was $203,500, 7.0% more than July 2014.
West: July existing-home sales up 3.2% to an annual rate of 1.28 million, up 11.3% from a year ago. The median price was $327,400, 8.4% more than July 2014.