Sales of existing homes improve in July as prices rise

Sales of existing homes are strengthening and prices continue to rise, stoking confidence in the housing market’s recovery.

Resales of single-family homes, town houses, condominiums and co-ops grew 2.3% in July from June to a seasonally adjusted annual rate of 4.47 million, according to the National Assn. of Realtors. The measure took an unexpected drop in June.

Resales jumped 10.4% compared with the same month last year. Economists at the Realtors association believe that sales could reach an annual rate of 5 million next year.

The West, where inventory is in short supply, was the only region where sales didn’t increase month to month. But compared with last year, contracts that closed in the region were up 5.9% and the median price of existing homes soared 24.5% to $238,600, the trade group said.

Nationwide, prices were on a tear, rising 9.4% from a year earlier to a median price of $187,300. The increase is the largest since a 10.2% boost in January 2006.

Demand is stronger because of low mortgage interest rates and rising rents, according to Lawrence Yun, the trade group’s chief economist. But “the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions,” Yun said in a statement.

Though first-time buyers made up more than a third of resale clients, in normal housing conditions they’d constitute 40%. Many are still being pushed out by investors making all-cash offers, even though the ranks of such buyers are shrinking.

Distressed homes, which include foreclosures and short sales, made up 24% of sales in July, down from 25% the previous month and nearly 30% a year earlier.

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