Sales of existing homes rise to fastest rate since October
- Kent Hoover
- Washington Bureau Chief
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Sales of existing homes rose 2.6 percent in June, topping an annual rate of 5 million for the first time since last October.
That’s according to the National Association of Realtors, which counts single-family homes, townhomes, condominiums and co-ops in this total.
Despite June’s gains, existing home sales are below where they were a year ago. But there are signs that sales should continue to increase in the coming months.
“inventories are at their highest level in over a year, and price gains have slowed to much more welcoming levels in many parts of the country,” said NAR Chief Economist Lawrence Yun. “This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”
But supply shortages in certain areas, particularly the West, means that construction of new homes needs to increase before housing makes a full recovery, he said.
Plus, while the economy is adding jobs at a healthy clip, wage growth is stagnant. This “is leaving a large pool of potential homebuyers on the sidelines who otherwise would be taking advantage of low interest rates,” Yun said.
The high cost of Federal Housing Administration mortgage insurance also are deterring potential home buyers who have good credit scores but not much money for down payments, said NAR President Steve Brown, co-owner of Irongate Inc. Realtors in Dayton, Ohio.
“Access to affordable credit continues to hamper young, prospective first-time buyers,” added Brown. “NAR recommends that FHA reduce high annual mortgage insurance premiums for all qualified homebuyers and eliminate the insurance requirement for the life of the loan.”
The median price for an existing home in June was $223,300, up 4.3 percent from June 2013. Foreclosures and short sales accounted for 11 percent of existing-home sales in June, down from 15 percent a year earlier.