Existing Home Sales Ease At Third-highest On Record, Says NAR

By: Realty Times Staff
Existing-home sales declined in July from a record in June, but home prices continue to rise at double-digit rates, according to the National Association of Realtors.

Total existing-home sales - including single-family, townhomes, condominiums and co-ops - slipped 2.6 percent in July to a seasonally adjusted annual rate of 7.16 million from an upwardly revised record of 7.35 million in June. Sales were 4.7 percent higher than the 6.84 million-unit pace in July 2004.

David Lereah, NAR's chief economist, said home sales remain in historic territory. "The level of existing-home sales in July was the third highest on record," he said. "This is a big number any way you slice it, and housing is continuing to stimulate the overall economy." The second highest level of sales activity ever recorded was in April of this year, with a pace of 7.18 million units.

The national median existing-home price for all housing types was $218,000 in July, up 14.1 percent from July 2004 when the median price was $191,000. The median is a typical market price where half of the homes sold for more and half sold for less.

Lereah noted that the strongest rates of price growth tend to move geographically. "In examining the hottest markets for home price appreciation, we see a rolling boom moving from one metro area to another over time, as well as a spillover effect into nearby areas with lower home prices," he said. "This is spreading the wealth of housing returns, with a natural easing of appreciation in areas following a period of extraordinary price growth. Even after slowing in a given area, prices typically have continued to rise faster than historic norms." Over the last four-and-a-half years of record home sales, no area that has experienced a sustained period of double-digit price growth has later seen a price decline.

NAR President Al Mansell of Salt Lake City said the rate of price growth is a simple reflection of supply and demand. "Housing inventory levels improved in July, but they're still quite lean by historic standards," he said. "If the supply of homes rises, it should reduce competition between buyers and take some of the pressure off of prices. Even so, we expect home price appreciation to remain above normal over the next year."