Despite a shortage of homes for sale and still-tough lending standards, existing homes sales rose in June for a fourth straight month.
In its monthly report, the National Association of Realtors (NAR) said completed sales transactions rose 1.1% to a seasonally adjusted annual rate of 5.57 million. With the increase, sales are up 5% from June 2015 and remain at their highest annual pace since February 2007.
Notably, there were more first-time buyers, nearly all who plan to live in the homes, and the fewest number of investors since July 2009.
Lawrence Yun, NAR chief economist, says the first half of 2016 shows a strong housing market. He says more normal market conditions are helping.
“Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases,” Yun said.
Yun cautions that it isn’t clear if the market can keep up the pace of the last four months. While interest rates remain low, so do home inventories and the competition among buyers has sent prices higher.
The median existing-home price for all housing types in June was $247,700, up 4.8% year-over-year. June’s price increase was the 52nd straight month of year-over-year gains and surpasses May’s peak median sales price of $238,900.
At the same time, the NAR report shows total housing inventory at the end of June fell 0.9% to 2.12 million existing homes available for sale. That’s nearly 6% lower than a year ago and amounts to less than a five-month supply.
Still, Yun finds some things to be encouraged about.
“The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market,” he said.
He says the chances of being able to close on a home are definitely higher right now for first-time buyers living in metro areas, especially in parts of the Midwest and all of the South.