Us property sales slow

Photo credit: Michael Patrick

Existing home sales increased 5.8 percent to a seasonally adjusted annual rate of 4.87 million in the second quarter of 2014, according to the NAR, but remain below the 5.1 million pace set during the second quarter of 2013.

House prices also continued to moderate in the second quarter. Annual price growth is now at its slowest pace since 2012.

Nonetheless, the national median existing single-family home price in the second quarter was $212,400, up 4.4 percent from the second quarter of 2013 ($203,400). The median existing single-family home price increased in 71 per cent of measured markets, while 27 per cent recorded lower median prices from a year earlier. However, there are still fewer rising markets in the second quarter compared to the first quarter, when price increases were recorded in 74 per cent of metro areas.

So is the moderation good or bad news for the market?

Lawrence Yun, NAR chief economist, says price increases are balancing out to the benefit for both buyers and sellers: "National median home prices began their most recent rise during the first quarter of 2012 but had climbed to unsustainable levels given the current pace of inflation and wage growth. At this slower but healthier rate, homeowners can continue steadily building equity. Meanwhile, for buyers, increased supply with moderate price gains is giving them better opportunities to choose."

Yun adds that despite the stabilization in price growth, sharp increases still exist in some markets and are impacting sales, notably on the West Coast where inventory shortages are more prevalent.

Lower interest rates and a slight rise (0.7 per cent) in the national family median income ($64,751) led to improved buying power in a majority of metro areas during the second quarter5. To purchase a single-family home at the national median price, a buyer making a 5 per cent downpayment would need an income of $47,816, a 10 per cent downpayment would require an income of $45,299, and $40,266 would be needed for a 20 per cent downpayment.

Total housing inventory, meanwhile, showed much-needed improvement at the end of the second quarter, with 2.30 million existing homes available for sale, 6.5 per cent higher than a year ago.

NAR President Steve Brown, says even with the increase in supply, properties that are selling do so at a faster pace than earlier in the year: "The improving economy and lower interest rates are increasing the pool of interested buyers. On the contrary, competition remains tight and all-cash offers are still a common occurrence. This inevitably is causing hesitation for some first-time buyers, who are more likely to have lower downpayments and need to secure financing amidst tight credit conditions."