Existing Home Sales up 6.6 Percent in July

The median home price shot up 14 percent year over year to $213,500, marking double digit growth for the last eight months and registering 7.3 percent below the all time record of $230,400 in July 2006.

Regionally the Northeast had the biggest surge in sales for July at 12.7 percent along with the most sluggish raise in median home price, just 6.7 percent from a year ago.  Midwest July sales rose 5.8 percent, the South 5.0 percent and the West 6.6 percent, with median home prices 9.5 percent, 13.6 percent, and 19.2 percent, respectively, above prices in 2012. 

Rising mortgage rates have been an incentive for buyers to close deals but with rates moving up less buyers may enter the market said Lawrence Yun, NAR chief economist. The average rate for a 30 year conventional fixed-rate loans moved up 4.37 percent in July from 4.07 percent in June. 

“Although housing affordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall,” said Yun. 

Surprisingly cash has been the preferred method of purchase for 31 percent of transactions in both June and July of this year–about half of which were from individual investors–according to NAR data. Cash investor transactions peaked at 22 percent in February and have been on a downward trend to 16 percent in July as less bargain price inventory is available. NAR president Gary Thomas said more repeat buyers are using cash to purchase homes instead of loans in the current tight credit market. 

A Goldman Sachs survey reported cash transactions even higher–60 percent for the first half of 2013– about double what it was before the housing market crashed. Investor transactions may be the major source of housing recovery in the first half of 2013 if Goldman Sachs figures are accurate.