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National Home Prices Up in June As Annual Gains Continue
|While increasing home prices may seem negative to potential buyers, monthly gains indicate the market is recovering, despite a drop in sales.
Wednesday, August 15th, 2012
While increasing home prices may seem negative to potential buyers, monthly gains indicate the market is recovering, despite a drop in sales.
The National Association of Realtors reports that total existing-home sales fell 5.4 percent to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May. Despite the decrease, existing-home sales in June were 4.5 percent higher than this time last year, when the level reached 4.18 million.
"Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities," said Lawrence Yun, chief economist of NAR. "This, in turn, is pushing up home prices in many markets."
As record-low mortgage rates continue to offer high affordability, rising home prices are allowing more current homeowners to list their property for sale. A decrease in delinquent homes listed for sale has also allowed once-hindered prices to increase.
Data shows the national median existing-home sale price for all housing types was $189,400 in June, up 7.9 percent from June 2011, marking the fourth consecutive month of year-over-year increases. NAR notes June's gain was the strongest achieved since February 2006, when the median price was up 8.7 percent from the year before.
According to the report, distressed homes accounted for 25 percent of total sales in June, matching the amount in May but slightly down from June last year when foreclosures and short sales made up 30 percent of sales. The average foreclosure sold for 18 percent less than its market value in June.
Yun says sales of distressed homes are expected to go down as the number of delinquent mortgages continues to decrease.
Some housing markets that were formerly hit hard by the housing market slump have recently been seeing major improvements, including some in South Florida, where buyer traffic has doubled from last fall. Sellers who may have been hesitant to list their homes for sale while the market was down may soon benefit, as NAR notes that favorable market conditions are helping fulfil pent-up demand for becoming a homeowner.
First-time buyers accounted for 32 percent of all purchases in June, just lower than the 34 percent in May but a little higher than this time last year when they made up 31 percent of sales.
"A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity," Yun said.
As more Americans continue to become homeowners, housing inventory continues to decrease. The report reveals that total housing inventory at the end of June was down 3.2 percent to 2.39 million existing homes for sale, representing a 6.6-month supply at the current sales pace. In May, there was a 6.4-month supply, while a year ago, there was a 9.1-month supply.
National real estate trends have a major impact on the real estate market on a daily basis. Keeping up-to-date on the latest news and notes posted by GL Homes can make sure those looking for South Florida homes know exactly how the current market will affect them.