July Existing-home Sales Off Slightly From Record

August 24, 2004

WASHINGTON -- Existing single-family home sales slipped in July but still managed the third-best pace on record, according to the National Association of Realtors®.

Existing-home sales declined 2.9 percent to a seasonally adjusted annual rate* of 6.72 million units in July from a record pace of 6.92 million units in June; last month's sales activity was 8.6 percent above the 6.19-million unit pace in July 2003. The second-highest sales rate was in May of this year.

David Lereah, NAR's chief economist, said changes at this volume of sales are relative. "Prior to this year, the July sales pace would have been a real eye-popper," he said. "The fact is – it remains so. The present level of home sales activity is considerably above last year's record, and the new benchmark we'll set in 2004 is a significant contributor to overall U.S. economic growth."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.06 percent in July, down from 6.29 percent in June; it was 5.63 percent in July 2003.

Lereah said interest rates have continued to decline over the last few weeks. "The 30-year fixed-rate mortgage is now in the range of 5.8 percent, which will preserve favorable housing affordability conditions and help to keep home sales historically strong in the months ahead."

NAR President Walt McDonald, broker-owner of Walt McDonald Real Estate in Riverside, Calif., said mortgage interest rates are only part of the picture. "The fundamental demand from entry level buyers, dominated by the second-largest generation in U.S. history – the children of the baby boom – will drive home sales over the next ten years because this generation is entering the prime years in which people typically buy their first home."

The national median existing-home price was $191,300 in July, up 8.7 percent from July 2003 when the median price was $176,000. The median is a typical market price where half of the homes sold for more and half sold for less.

Housing inventory levels at the end of July were unchanged from June at 2.40 million existing homes available for sale, which represents a 4.3-month supply at the current sales pace.

Regionally, the existing-home sales pace in the South rose 0.4 percent in July to an annual rate of 2.77 million units, and was 11.7 percent above a year ago. The median price of an existing home in the South was $176,800, up 7.0 from July 2003.

Existing-home sales in the Northeast slipped 1.4 percent in July to a pace of 730,000 units, but were 4.3 percent above July 2003. The median existing-home price in the Northeast was $216,100, up 8.8 percent above a year ago.

Existing homes in the Midwest were selling at an annual rate of 1.39 million units in July, down 4.8 percent from June, but were 3.0 percent higher than the same month a year earlier. The median price in the Midwest was $157,200, up 6.6 percent from July 2003.

Home resales in the West declined 6.6 percent in July to an annual rate of 1.83 million units, but were 9.6 percent higher than a year ago. The median existing-home price in the West was $175,900, up 17.4 percent in the last year.

Source: The National Association of Realtors

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