Existing Home Sales Show Modest Monthly Gain

The sales of existing homes rose 2.5% in July as price appreciation continues to moderate and demand remains highest for those priced at or below the median. However, for the first seven months of the year, sales are down 2.9% compared to the same period last year.

According to the Wells Fargo Economic Group, lower mortgage rates appear to be still helping the numbers, but a lack of affordable units for sale are having the opposite effect.

Regionally, the West has had the greatest home price appreciation in recent years, and homes priced at the median or less are harder to find. The South is only down 1.0% their year-ago pace, the Northeast is registering a 1.8% drop in the same time period and the Midwest is off 3.6%, due to "the extended run of wet weather and flooding this past spring (that is) likely keeping many potential buyers off the market," reports the Economics Group. Also, they blame the struggling demand in the Northeast on recent tax reform, which "adds to the challenging demographics of the Northeast," and its moderate gains in population.

As for prices of existing homes, the median has increased nationwide 4.3% over the past year to $280,800, with single-family homes rising 4.5% to $284,000 and condos/co-ops up only 1.9% to $254,300. This inconsistency "likely reflects the effects of tax reform and the slowing global economy, which have cooled demand in higher priced global gateway cities favored by international buyers."

On the other hand, the demand for lower priced condos in other areas of the country is still rather robust, but sales are hampered by low supply, which also is affecting the single-family market.

The inventory for all residences was at 1.89 million homes at the end of July, down1.6% from a year ago. The National Association of Realtors reported that home price appreciation for those under the median price has been much greater than for those above the median, particularly in cities that have seen strong job and population growth since the Great Recession, such as Atlanta, Denver, Miami and Tampa-St. Petersburg.

Mortgage applications to purchase existing homes dropped during the latest week despite lower mortgage rates, but are up 5.3% over the past year, whereas applications to refinance an existing mortgage have skyrocketed 180%.