Key Takeaways from the July Existing Home Sales Report
- Existing home sales rose more than expected in July, up 2 percent to 5.59 million units (SAAR), their highest level since February 2007, according to the National Association of Realtors.
- July was the third consecutive month in which existing sales exceeded expectations, but in the past two months, initially reported sales were later revised downward.
- The median sales price of existing homes was relatively flat in July, extending a five-month trend.
Maybe the record summer heat is making home shoppers a little bit crazy. Existing home sales again blew past expectations in July, rising to 5.59 million units at a seasonally adjusted annual rate (SAAR), up 2.0 percent from June and 10.3 percent from a year earlier (figure 1).
Existing sales are now at their highest level since February 2007, surpassing the jump in sales leading up to the expiration of home buyer tax credits in November 2009. July represents the third consecutive month in which existing sales volume has exceeded market expectations. It is worth noting that in both May and June, these surprises were eventually muted by later downward revisions to the initial data.
Relatively low inventory continues to weigh on sales, despite the recent gains. And a falling homeownership rate suggests that a historically large share of transactions reflect churn – buyers who have recently sold and are buying again – rather than first-time buyers or buyers re-entering the market after a period spent renting.
Monthly gains were strongest in the South (4.1 percent) and West (3.2 percent). Sales were flat in the Midwest and posted a monthly decline in the Northeast (-3.8 percent). The retreat in the Northeast demands some context, because the region has experienced very strong sales growth in recent months. Compared to last July, all major regions are up between 9 percent and 10 percent.
Median sales prices for existing homes are almost 6 percent higher than a year ago, but are stabilizing from month-to-month. In July, the median price of existing homes sold held steady around $218,000. After rising from $210,000 to $218,000 in the five months between November 2014 and March 2015, the median sales price has since fluctuated between $218,000 and $221,000. This stabilization in sales prices is a welcome development for many home shoppers still struggling to save an adequate down payment for an on-budget home.