Existing-home sales in August reached their highest level in six years, as a tightening inventory continues to drive home price increases, according to the National Association of Realtors (NAR).
Total existing-home sales—single-family homes, town homes, condominiums and co-ops—rose 1.7% to a seasonally adjusted annual rate of 5.48 million in August. This was an increase from July’s 5.39 million, and 13.2% higher year-over-year compared to August 2012.
While sales are at the highest pace since February 2007 when they hit 5.79 million, according to NAR’s analysis, there have been several factors contributing to purchase activity, according to NAR Chief Economist Lawrence Yun, such as rising mortgage rates and other “market frictions.”
“Thigh inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase,” Yun said.
Total housing inventory at the end of August increased 0.4% to 2.25 million existing homes available for sale. This figure represents a 4.9-month supply at the current sales pace, down from a 5.0-month supply in July.
Meanwhile, the national average commitment rate for a 30-year conventional fixed-rate mortgage rose to 4.46% in August, and is the highest since July 2011 when it was 4.55%. In August 2012, the rate was 3.60%.
A tightening supply has also driven home prices to one of the strongest annual price gains in eight years.
The national median existing-home price for all housing types was $212,100 in August, up 14.7% from year ago levels, and the strongest year-over-year appreciation since October 2005, when the median price rose 16.6%.
August’s home price increase was also the ninth consecutive month of double-digit year-over-year increases, and marks 18 consecutive months of annual gains.
Rising home values will encourage more people to sell as homeowners’ equity continues to improve, says NAR President Gary Thomas.
“Most of those owners also will be buying another home, but higher levels of new home construction going into 2014, combined with some reduction in demand from less favorable affordability conditions, will help to moderate price growth to more sustainable levels,” he said.
Written by Jason Oliva