Us home sales up for third month in a row

Photo credit: Cyndie

US home sales have risen for the past three months in a row, according to new figures from the National Association of Realtors.

Improving employment prospects in a recoverying economy are boosting confidence among homeowners, while the prospect of rising mortgage rates and house prices are encouraging them to act sooner rather than later.

"Current homeowners are using their increasing housing equity towards the downpayment on their next purchase," explains Lawrence Yun, NAR chief economist.

As a result, total existing home sales rose 2 per cent in July 2015 to reach the highest annual rate (5.59 million) since February 2008 (5.79 million). Sales are now 10.3 per cent higher than a year ago - the 10th month of year-on-year rises in a row.

"Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," adds Yun.

Indeed, the median existing-home price for all housing types in July was $234,000, which is 5.6 per cent above July 2014 - the 41st consecutive month of year-over-year gains. Combined with low supply levels (total housing inventory at the end of July is now 4.7 per cent lower than a year ago), first-time buyers are finding it hard to get onto the housing ladder, with their share of sales falling to the lowest level since the start of the year.

This share declined in July for the second consecutive month, falling from 30 percent in June to 28 percent. A year ago, first-time buyers represented 29 percent of all buyers.

"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," adds Yun. "Rising rents and flat wage growth make it difficult for many to save for a downpayment, and the dearth of supply in affordable price ranges is limiting their options."