The National Association of Realtors^® reported today that existing-home sales in July were down from the previous month but were significantly higher than a year earlier. Existing home sales include completed transactions on single-family homes, townhomes, condominiums, and cooperative apartment.  The annualized rate of existing home sales fell to 4.67 million in July from 4.84 million in June, a drop of 3.5 percent.  The June figure was significantly revised upward in this month's report from an earlier estimate of 4.77 million.   The July number is a 21.0 percent increase from July 2010 which NAR described as a cyclical low period following the expiration of the home-buyer tax credit.

Lawrence Yun, NAR chief economist, said there is a tug and pull on the market.  "Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers," he said.  "Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs."

As was the case in June, contract failures in which a pending sale is cancelled because of declined mortgage applications, low appraisals, or other problems were reported by 16 percent of NAR members.  In addition, 9 percent of Realtors^® report a contract was delayed in the past three months due to low appraisals, and another 13 percent said a contract was renegotiated to a lower sales price because an appraisal was below the initially agreed price.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said an unacceptably high number of potential home buyers are unable to complete transactions.  "For both mortgage credit and home appraisals, there's been a parallel pendulum swing from very loose standards which led to the housing boom, to unnecessarily restrictive practices as an overreaction to the housing correction," he said.

The median price for all existing homes was $174,000, down 4.4 percent from one year earlier.  Approximately 29 percent of all sales in July were of distressed homes either from foreclosure sales, real estate owned by lenders, or short sales compared to 30 percent last month and 32 percent one year earlier.  These often deeply discounted sales continue to put downward pressure on housing prices. 

Single-family home sales declined 4.0 percent to a seasonally adjusted annual rate of 4.12 million from 4.29 million but were 21.5 percent higher than the annual rate of 3.39 million in July 2010.  The median existing single-family home price was $174,800, down 4.5 percent from a year ago.  Condominium and co-op sales were unchanged from June's rate of 550,000 and are 17.3 percent above sales a year ago.  The median price for a condo was $168,400, a 4 percent decrease year-over-year.

First time buyers were responsible for 32 percent of sales, up one percentage point since June with repeat homebuyers accounting for 50 percent and investors 18 percent.  Investors accounted for most of the 29 percent of sales that were all-cash transactions.  All of these figures are essentially unchanged both year-over-year and month-over-month.

Total housing inventory was down 1.7 percent at the end of the month with 3.65 million existing homes available for sale, a 9.4 month supply at the current pace of sales.  In June the inventory represented a 9.2 month supply. at the end of July fell 1.7 percent to 3.65 million existing homes available for sale, which represents a 9.4-month supply⁴ at the current sales pace, up from a 9.2-month supply in June.

On a regional basis, sales in the Northeast and the Midwest were up while the South and West declined.  The Northeast's annual rate rose 2.7 percent to 750,000, a 19 percent increase since last year while the Midwest increased 1 percent to a pace of 1.05 million, 31.1 percent higher than July 2010.  The median price in both regions also declined year-over-year; in the Northeast prices were down 6.8 percent to $245,600 while the Midwest dropped 2.9 percent to $146,300. 

In the South existing-home sales declined 1.6 percent to a rate of 1.84 million in July but are 19.5 percent above sales in July 2010.  Sales in the West sales were down 12.6 percent to an annual pace of 1.04 million in July; this was 6.9 percent higher than a year ago.  The median price in the West was $208,300 down 7.1 percent and in the South the median was $152,600, 2.2 percent below a year ago.