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Numbers: Homeowner-owned home sales edged up 2.5% in July, as mortgage rates offset the affordability problem caused by high prices for marginal dwellings.
Existing homes recorded a seasonally adjusted annual pace of 5.42 million, against 5.29 million revised in June, announced Wednesday the National Association of Realtors. Compared to last year, sales increased by 0.6%.
Economists surveyed by MarketWatch expected an average annual rate of 5.40 million euros.
What happened: The median selling price increased by 4.3% over the previous year to $ 280,800. While the rate of home price appreciation has slowed significantly this year, prices continue to climb, largely due to limited inventory of homes for sale.
Sales advanced 8.3% in the West and a more modest increase of 1.6% in the Midwest and 1.8% in the South. In the northeast, transactions fell 2.9%, while it was the only region not to have seen real estate prices rise over the past year.
Big picture: The steep drop in mortgage rates in 2019 has resulted in the largest wave of refinancing activity in recent years, but has not yet prompted a rebound in home purchases. Potential buyers are still paralyzed by the lack of inventory. Starting in July, it would take 4.2 months for all homes available on the market to be sold, compared to 4.4 months in June. This is well below the six-month benchmark for home stocks that determines whether the market is balanced, suggesting that it is still a sellers' market.
Nevertheless, falling interest rates could increase the affordability of potential buyers at margins, given the historically high prices of homes in many markets nationwide. This could drive up home prices in expensive coastal markets, where some sellers have been forced to lower prices to fuel interest.
"Mortgage rates are important to consumers, but confidence in the country's overall economic outlook is also," said Lawrence Yun, chief economist at the National Association of Realtors. "Buying a home is a serious long-term decision and future low or even lower mortgage rates might not, in and of themselves, boost sales significantly if they do not." are not accompanied by an improvement in consumer confidence. "
What they say: "Even though lower mortgage rates are driving the real estate market, the lack of accumulated demand, economic uncertainty and high prices in some major cities keep the market at its lowest," said Michael Gregory, Deputy Chief Economist. BMO Capital Markets. a research note.
Others were more optimistic about the future of the market despite lower rates. "We are optimistic that sales will increase significantly during the latter part of this year and the first few months of 2020. This, in turn, will boost the build-to-term business," wrote Ian Shepherdson. , founder and chief economist of Pantheon Macroeconomics, in a research note.
Market reaction: The 10-year Treasury yield
TMUBMUSD10Y, + 1.04%
It has collapsed to the lowest level in three years due to concerns over trade relations and the global economic downturn.
The Dow Jones Industrial Average
DJIA, + 1.10%
and the S & P 500
SPX, + 0.89%
were up on Wednesday morning. However, concerns over the recession have hardened the markets recently and investors remained cautious this week, awaiting Fed Chairman Jerome Powell's speech at the annual Jackson Hole symposium on Friday.
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