September 2013 Market Update
The annual rate of home sales rose to the highest level since 2009 in July, the jump likely boosted by formerly reluctant buyers being pushed off the sidelines by the anticipation of rising mortgage rates. As speculation continues on the date and extent of the Federal Reserve’s reduction in its purchases of unconventional assets, mortgage rates have already begun to rise and are unlikely to return to the historic lows witnessed early in the year. With rates on the move, prospective buyers would do well to take advantage of low rates while home affordability remains at historically high levels. Prices moderated slightly in July from their peak in June, likely due to seasonal variation, but maintained high year-over-year growth rates. Sellers are still well-positioned in the national market with inventory still relatively tight in many areas.
Interest rates have moved up this month: 30-year fixed-rate mortgages are currently 4.58% with 15-year rates at 3.60% and 5-year adjustable rates at 3.21%. These are the highest rates we have seen in the last two years.
Total existing home sales in July were up 6.5% from June to a seasonally adjusted annual rate of 5.39 million homes. Year-over-year home sales were up 17.2% from the July 2012 rate of 4.6 million homes. The housing market recovery is still well under way with 25 consecutive months of year-over-year growth in home sales heading into this fall.
The median existing home price in the United States in July was $213,500, down slightly from the previous month but up 13.7% from the same month last year. The median price level released by the National Association of Realtors is not seasonally adjusted and the small dip we experienced from June to July is consistent with those we have seen in the past. This is the seventeenth consecutive month of year-over-year price increases, which last occurred from January 2005 to May 2006.
A slight rise in inventory levels was evenly offset by the increase in the pace of home sales, causing the months of supply for existing homes to hold steady at 5.1 months. Total housing inventory rose by 5.6% in July to a level of 2.28 million homes. Inventory is 5% below levels reported for July of last year, which represented 6.3 months of supply at the time.