Existing Home Sales June 2015

Sales of existing homes increased 3.2 percent in June according to the National Association of Realtors.  On an annualized basis, there were 5.49 million units sold.  This is the best monthly total since February 2007, before the great recession.  Year-over-year, the total has improved by 9.6 percent.  Internals looked strong, including first-time buyers who accounted for 30 percent or more of the total sales for the fourth month in a row.

All regions improved in the period.  Sales in the Northeast jumped 4.3 percent in June and have improved 12.5 percent from a year earlier.  The uptick in the Midwest was even stronger, up 4.7 percent in the period and 12.7 percent over the past 12 months.  Sales in the South increased 2.3 percent and 7.3 percent on a monthly and annual basis respectively.  Finally, existing home sales in the West were 2.5 percent higher from a month earlier and were 8.8 percent above a year ago.

Price measures were boosted in June.  The average cost of a home in America is now $280,300, up from $273,000 in May and $268,100 a year earlier.  A new record was set for the median price.  Passing the previous record set in July 2006, June’s median home sold for $236,400.

The cost of borrowing money rose in the period but remains relatively low.  According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.98 percent from 3.84 percent in May.  However, this measure remained below 4.0 percent for the seventh straight month.

Inventory figures were mixed.  The total number of homes for sale increased 0.9 percent to 2.3 million units.  On a relative basis, the stock of homes fell.  At the current pace of sales, the entire supply of homes would be sold in 5.0 months versus 5.1 months in May.

Housing remains a strengthening segment of our economy.  A rising trend in this indicator bodes well for spending as the second half of the year matures.  As families move into their homes, ancillary spending for durable items like furniture and appliances is expected to follow.  Ever been to a house warming party?  Nondurable spending goes into throwing these celebrations.  From the vantage point of this indicator, America’s economic expansion is continuing.        (by C. Cox)