Sales of existing home increased strongly in July and median home prices are now nearing their pre-crash peak National Association of Realtors® (NAR) said today.  Sales in July rose to a seasonally adjusted annual rate of 5.39 million units.  This represented an increase of 6.5 percent from the revised (from 5.08 million) estimate for June of 5.06 million.  The July figure was 17.2 percent above the level of sales in July 2012 and July was the 25th month in which existing sales were up from those of the previous year.  Existing home sales are completed transactions that include single-family houses, townhomes, condominiums and coops.

Sales of single family homes were at an annual rate of 4.76 million compared to 4.48 million in June, a 6.3 percent increase and were 16.4 percent higher than a year earlier.  Sales of existing condominiums and coops increased 8.6 percent from June and 23.5 percent on an annual basis to a pace of 630,000 units.

The median price for an existing home was $213,500 in July, a 13.7 percent increase from July 2012 and the17th consecutive month that prices have risen on an annual basis. For the last eight months the median price has increased by double digits and is now 7.3 percent below the all-time peak of $230,000 in July 2006.  Two years ago the median price was off 25.7 from that peak.  The median existing single-family home price was $214,000 in July, up 13.5 percent from a year ago and the median existing condo price was $209,600 in July, an annual increase of 15.5 percent.

Lawrence Yun, NAR chief economist, said changes in affordability are impacting the market.  "Mortgage interest rates are at the highest level in two years, pushing some buyers off the sidelines," he said.  "The initial rise in interest rates provided strong incentive for closing deals.  However, further rate increases will diminish the pool of eligible buyers."

Despite higher mortgage interest rates, Yun identified compensating factors that can sustain a continued recovery.  "Although housing affordability conditions will become less attractive, jobs are being added to the economy, and mortgage underwriting standards should normalize over time from current stringent conditions as default rates fall."

Existing housing inventory rose 5.6 percent at the end of July with 2.28 million homes available for sale.  This represents a 5.1 month supply at the current rate of sales, unchanged from June.  Listed inventory is 5.0 percent below a year ago, when there was a 6.3-month supply.  "Tight inventory in many areas means above-normal price growth for the foreseeable future," Yun said.

Foreclosures accounted for 9 percent of July sales and short sales for 6 percent.  The distressed salessales sales aggregate of 15 percent was the same as in June and tied for the lowest share since monthly tracking began in October 2008.  NAR said continuing declines in the share of these sales account for some of the price gains.