The National Association of Realtors® (NAR) reported that existing home sales rose significantly in July, up 6.5 percent. Existing home sales increased from 5.06 million annualized units in June to 5.39 units in July. This continues the rebound that we have seen in the overall housing sector, with year-over-year growth of 17.2 percent. For the month, each region of the country experienced increased sales, with the fastest growth occurring in the Northeast.
The higher sales figure was much higher than consensus estimates, and given higher mortgage rates, it might be somewhat counterintuitive. Yet, Lawrence Yun, NAR’s Chief Economist, suggested that the sharp rise in borrowing costs might be encouraging some people to act before rates move even higher. He said, “The initial rise in interest rates provided strong incentive for closing deals. However, further rate increases will diminish the pool of eligible buyers.”
There are currently 5.1 months of supply on the market nationally, a figure that has edged higher over the course of this year. In January, for instance, there were 4.3 months of supply. With that said, NAR suggested that inventories were tight in some areas of the country, helping to push prices higher. In July, the median home price for existing home sales was $213,500, or 13.7 percent higher than the average observed one year ago.
Chad Moutray is the chief economist, National Association of Manufacturers.