Us home sales hit seven-month high
Photo: Fifth World Art
Rising inventory boosts buyer confidence
The figures, which include completed transactions for single-family homes, townhomes, condominiums and co-ops, show deals rose 2.4 percent to a seasonally adjusted annual rate of 5.15 million in July from a slight downwardly-revised 5.03 million in June. Sales are 4.3 percent below July 2013, which was also the peak of that year, but have now risen four consecutive months, as employment and housing market conditions both improve.
Lawrence Yun, NAR chief economist, says that supply is on the up, encouraging buyers to climb the housing ladder. Indeed, total inventory at the end of July rose 3.5 percent to 2.37 million existing homes, while unsold inventory jumped 5.8 per cent.
"The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market," says Yun.
Indeed, he forecasts that low interest rates and rising rates see more people continue to buy homes - although affordability is likely to decline as rates rise once more, not to mention prices. Property values were up 4.9 per cent year-on-year in July to $222,900, the 29th month of annual growth in a row.
The fall of the international investor?
Distressed homes – foreclosures and short sales – accounted for 9 per cent of July sales, down from 15 per cent a year ago and the first time they were in the single-digits since NAR started tracking the category in October 2008. The decrease marks a milestone in the country's recovery from the financial crisis, when distressed sales once made up over 1 in 3 sales.
With fewer distressed opportunities on the market, investor demand also appears to be falling. Indeed, all-cash sales (the method preferred by investors)accounted for 29 per cent of transactions in July , down from 32 per cent in June and the lowest overall share since January 2013.
CoreLogic data confirms the decline, with the firm's figures showing cash made up the lowest share of national sales since May 2010. Florida had the largest share of any state at 53.4 per cent.
Nonetheless, individual investors, who account for many cash sales, purchased 16 per cent of homes in July, says the NAR, unchanged from last month and July 2013.
Indeed, in Florida, where cash is still king, data from CBRE shows that investment in the first half of 2014 has hit an eight-year high, with more than half a billion dollars' worth of Florida real estate snapped up. More than half of CBRE's Florida sales have been to foreign investors.
Miami's dual appeal
Investor interest may seem to be weakening - in the second quarter, 57.6 per cent of closed sales were all cash compared to 62.6 percent a year earlier, according to Miami Realtors - but it is in a manner relative to normal buyers, as the Miami market stabilises, much like the rest of the country.
The Miami real estate market continued to experience rising prices in the second quarter of 2014 due to strong demand. Sales of single-family homes priced between $200,000 and $400,000, meanwhile, surged 68 per cent in the second quarter of 2014 compared to the same period in 2013. Sales of condominiums priced between $100,000 and $400,000 increased 35 per cent in the second quarter.
"The Miami real estate market continues to reflect strength and vitality fueled by demand from both foreign and domestic buyers," comments 2014 Chairman of the Board of Miami Realtors, Liza Mendez.
"As the Miami real estate market continues to normalize and perform in a healthy manner, there are increased opportunities for all types of buyers," adds 2014 Residential President Francisco Angulo.