According to the National Association of Realtors®, existing-home sales rose strongly in July. Total existing-home sales, which are completed transactions that include single-family homes, townhouses, condominiums and co-ops, increased 6.5 percent.
Lawrence Yun, National Association of Realtors (NAR) chief economist, said changes in affordability are impacting the market. “Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines,” he said. “The initial rise in interest rates provides strong incentive for closing deals. However, further rate increase will diminish the pool of eligible buyers.”
Despite higher mortgage interest rates, Yun identified compensating factors that can sustain a continued recovery. “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.”
According to Freddie Mac, the national average commitment rate for 30-year, conventional, fixed rate mortgage rose to 4.37 percent in July from 4.07 percent in June, and is the highest since July 2011 when it was 4.55 percent; the rate was 3.55 percent in July 2012.
Total housing inventory at the end of July rose 5.6 percent to 2.28 million existing homes available for sale, which represents 5.1 month supply at the current sales pace. Listed inventory is 5.0 percent below a year ago, when there was a 6.3 month supply.
Existing home sales in the Midwest rose 5.8 percent in July to a pace of 1.28 million, and are 20.8 percent higher than a year ago. The median price in the Midwest as $168,300, which is 9.5 percent above July 2012.