By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
Home sales ended the summer on a high note, reaching their highest level in over six years in August. Prices went along for the ride, with the median price trending nine consecutive months of double-digit year-over-year increases.
Recovery meets growth. Now we’re making serious progress.
According to the most recent data from the National Association of Realtors, total existing-home sales – including single-family, condos, townhomes and co-ops – increase 1.7% to an annual rate of 5.48 million in August. The pace was up from 5.39 million in July and 4.84 million in August 2012.
To give you a bit more perspective on how the market is doing overall post-recovery, August sales were at the highest pace since February 2007, when they were 5.79 million. Sales have outpaced year-ago levels every month for the past 26 months.
How long can we expect the trend to continue? Will we hit a peak before the end of the year?
These are logical questions to which there’s never a clear answer.
NAR’s chief economist said we may be seeing a temporary peak, citing two factors that threaten to slow pace: tight inventory and rising interest rates.
There were 2.25 million existing homes available for sale in August – a 4.9-month supply at the current sales pace. This was down from a 5.0-month supply in July. The limited inventory in some markets has created multiple bid situations, meaning some buyers are being priced out. NAR said that 17% of all homes sold above the asking price in August, although 63% sold below list price – showing yet again that in housing, it’s all relative to location. Some markets are moving rapidly, while others are still slogging through.
In pricing, the national median price for existing homes was $212,100 in August, up 14.7% from the same month a year ago and the strongest yearly gain since October 2005.
The share of distressed home sales is shrinking, accounting for 12% of August sales, down from 15% in July and the lowest since monthly tracking began in October 2008. Meanwhile, 8% of August sales were foreclosures, and 4% were short sales.
The time it takes to sell a home was little changed in August – 43 days, compared with 42 days in July. However, much progress has been made in the last year, as it took 70 days on the market in August 2012.
Overall, it was a fantastic summer for housing nationwide, with some markets enjoying rapid sales with multiple bids and others simply enjoying healthy pace. The question remains of whether we’ll see a dip in market activity between now and the end of the year. For some markets, that’s likely to happen. But for others – especially where inventory is low but buyers are eager to purchase – we’ll likely continue to see growth in both volume and price.