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Existing home sales in the United States steadily increased for the third consecutive month in July, according to the latest data from the National Association of Realtors (NAR). However, stubbornly low inventory levels and rising prices have resulted in sales to first time buyers falling to their lowest share since January. The data shows that total existing home sales increased 2% to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. Sales in July remained at the highest pace since February 2007 when they were 5.79 million and have now increased year on year for 10 months in a row and are 10.3% above a year ago when they were 5.07 million. Lawrence Yun, NAR chief economist, explained that the increase in sales in July solidifies what has been an impressive growth in activity during this year's peak buying season. ‘The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,’ he said. ‘As a result, current home owners are using their increasing housing equity towards the down payment on their next purchase,’ he added. The data also shows that the median existing home price for all housing types in July was $234,000, which is 5.6% above July 2014. July's price increase marks the 41st consecutive month of year on year gains. ‘Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand. Agents in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains,’ Yun pointed out. Total housing inventory at the end of July declined 0.4% to 2.24 million existing homes available for sale, and is now 4.7% lower than a year ago when it was 2.35 million. Unsold inventory is at a 4.8 month supply at the current sales pace, down from 4.9 months in June. The percent share of first time buyers declined in July for the second consecutive month, falling from 30% in June to 28%, the lowest share since January of this year when it was also 28%. A year ago, first time buyers represented 29% of all buyers. ‘The fact that first time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face,’ said Yun. ‘Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options,’ he added. Properties typically stayed on the market for 42 days in July, an increase from 34 days in June but below the 48 days in July 2014. Short sales were on the market the longest at a median of 135 days in… Continue reading →