Sales of previously owned USA homes climbed to an eight-year high in June as momentum in the residential real estate market accelerated.
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Sales of existing homes rose 3.2% in June to a seasonally adjusted annual rate of 5.49 million, hitting the fastest pace since February 2007, the National Association of Realtors reported Wednesday. “A decrease in the number of days it takes on average to sell a home in Illinois shows that buyers are undeterred by the steady upward tick in prices”.
“The recent pace can’t be sustained, but it points clearly to upside potential”, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
NAR said the unsold inventory represents 5.0 months of supply at the current sales pace, down from 5.1 months in May.
The housing market has strengthened as of late, bolstered by a job market that’s added nearly 3 million workers to payrolls over the past year. The condominium market in Massachusetts contains just 1.8 months’ supply, according to a Federal Reserve report this month.
Sales climbed in all regions tracked by the Realtors: the West, Northeast, Midwest and South. There were fewer all-cash, individual investor and distressed home sales in the market, as more traditional buyers have returned.
“The burst in sales growth last month was unexpected”, said Geoffrey J.D.
The share of first-time homebuyers dropped to 30% from 32% in May, but that percentage remains above the share of first-time buyers in the market a year ago, at 28%. The median price of a home in Chicago was $290,000, up 5.5 percent over June 2014 when the median price was $275,000.
New construction has yet to satisfy rising demand, as builders are increasingly focused on the growing rental market.
Economists had expected existing home sales to edge up to an annual rate of 5.40 million in June from the 5.35 million originally reported for the previous month. Available housing inventory remained tight with 70,999 homes for sale, a 6.9 percent decline from June 2014 when there were 76,287 homes.
But the job market found new traction in early 2014. As millions more Americans have found work, their new paychecks are increasingly going to housing, both in terms of renting and owning.
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“June sales were also likely propelled by the spring’s initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher”, he said.
