Existing-home sales in July are expected to continue their upsurge, according to Auction.com’s July Real Estate Nowcast, which combines industry data, proprietary company transactional data and Google search activity to predict market trends as they are occurring.
According to Auction.com’s report, existing home sales for the month of July will fall between seasonally adjusted annual rates of 5.49 and 5.84 million annual sales, with a targeted number of 5.67 million.
That would be up 3.2% from June and 11.7% from a year ago.
June’s existing-home sales data, released last week by the National Association of Realtors, showed that existing-home sales increased 3.2% to a seasonally adjusted annual rate of 5.49 million in June from a downwardly revised 5.32 million in May – marking the highest pace since February 2007.
Auction.com Executive Vice President Rick Sharga said that the good times will continue when we get a look at July’s existing-home sale report from NAR.
“May and June existing home sales have both been very encouraging for anyone looking for proof that the housing market is in recovery, and our July Nowcast indicates that this positive momentum will continue into July,” Sharga said.
But the good times may not continue into perpetuity, Sharga said.
“One potential area of concern is the steeper-than expected increase in home prices,” Sharga said.
“While this is driven by limited inventory, and a declining number of distressed home sales, affordability may start to become an issue if home price increases continue to outpace wage growth,” Sharga added. “And if the Fed does move to raise interest rates as expected this fall, we could see home sales volume begin to weaken.”
On home prices, NAR’s June report showed that the median existing-home price for all housing types reached an all-time high in June thanks to rising demand and shrinking supply.
According to the latest data from NAR, the median existing-homes sales price rose to $236,400, which exceeds the previous peak median sales price set in July 2006 of $230,400.
June’s total also rose 6.5% above June 2014.
Auction.com’s report suggests that prices may rise even more in July.
Findings from the Auction.com Real Estate Nowcast suggest that sales prices for existing homes will fall between $227,170 and $251,082 in the month of July, with a targeted price of $239,126.
This represents a 4.6% month-over-month and a 7.7% year-over-year increase for the month, and would set another record for median home prices.
NAR’s report also showed that June’s all-cash sales dropped to the lowest share since December 2009, reaching just 22% of transactions in June, down from 24% in May and 32% a year ago.
“This is not surprising given the big increases in prices that are making return hurdles harder and harder to meet,” said Auction.com Chief Economist Peter Muoio.
“This is the lowest level of all-cash sales since December 2009,” Muoio said.
“Similarly, distressed sales accounted for just 8% in June, matching an August 2014 low,” Muoio said. “Taken together these indicators signify a housing recovery on more solid ground, with fickle investors playing a smaller role, the vast majority of sales non-distressed, prices back to pre-bust levels and sales increasing sharply.”