US existing home sales rebound in July amid lower mortgage rates
Sales of previously owned homes in the US rose for only the third time this year, data on Wednesday showed, but July’s increase suggested lower mortgage rates helped support the housing market.
Existing home sales rose 2.5 per cent from the prior month, in line with forecasts, to an annualised pace of 5.42m units, the National Association of Realtors said. That came after June’s figures were revised up to show a smaller 1.3 per cent drop (1.7 per cent decline previously).
“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s chief economist. Indeed, the 30-year fixed mortgage rate fell to about 3.8 per cent last month, according to Freddie Mac, down from a peak of 4.9 per cent in November.
However, the report highlighted the stock of lower-priced homes is low and recent data that showed the quickest price appreciation in less expensive homes.
“The area of the housing market where there is the most demand are for those priced below $300k and that is where there is the least amount of inventory as investors have taken many off the market and are now renting them instead and builders can’t build enough,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
“The higher end of the market is clearly slowing, particularly in the high taxed states where the cap on the [state and local tax] SALT deduction hurts. Sales are doing better in between.”
Wednesday’s report showed the median existing home price for all housing types rose 4.3 per cent year-on-year to $280,000 in July.
Meanwhile, housing inventory at the end of July slid to 1.89m, down 1.6 per cent from a year ago. Scarce land and high labour costs have also curtailed the construction of new homes, heaping further upward pressure on home prices.