August 26th, 2013
A spike in existing-home sales in July demonstrates that the U.S. housing recovery is still on track. The National Association of Realtors considers any completed transaction of a single-family home, townhouse, condo or co-op to be an existing-home sale.
According to the NAR’s recent report, in July, existing-home sales in the United States jumped 6.5 percent to a seasonally adjusted rate of 5.39 million per year. This is compared to a downwardly revised 5.06 million sales in June, and is also an impressive growth from the year prior, when there were only 4.6 million units sold annually.
The nation’s rate of sales of existing homes has been on an upward trend for a long time now. In fact, as of July, sales have maintained year-over-year increases for 25 months, the NAR reported.
“We haven’t had three straight months of 5 million or greater [existing-home sales] since the second quarter of 2007,” NAR spokesman Walter Molony told USA Today. “To go back and find a month with a higher sales volume, without the benefit of federal tax credits, you have to go back to March 2007.”
Mortgage rates have been rising ever since hitting near-record lows in the spring, but they are still extremely low compared to average rates from the past many years. Indeed, the positive results of the NAR report show the rate increases are not deterring homebuyers.
According to Freddie Mac, the average rate for a 30-year fixed loan hit 4.37 percent in July, up from 4.07 percent the month prior.
Now is a great time to buy
Because mortgage rates still sit near record lows, now remains a prime time to buy a home. And even as rates move higher, the rest of the U.S. economy is holding strong and will sustain the housing market’s growth, analysts believe.
“Although housing affordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall,” said Lawrence Yun, NAR’s chief economist.
More jobs will also likely be created as the booming housing market requires new construction. Buyer demand is still high, which keeps supply low. Builders will need to make more hires to provide the inventory the country needs.
In fact, research from Moody’s Analytics shows that an increase from less than 1 million new homes a year to 1.7 million could add more than 3 million jobs by 2015.