First-Time Buyers Give Home Sales a Boost
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The housing market in June shifted as fewer investors closed on homes. The gap in the market was filled by first-time buyers, who accounted for 33 percent of the market in June, up 3 percent from both a month and a year ago. The number of first-time buyers closing on properties hasn't been this high since July 2012. For the first half of 2016, the share of first-timers in the market averaged 31 percent; for all of 2015, the average was only 30 percent. "The modest bump in June sales to first-time buyers," says Lawrence Yun, chief economist with the National Association of Realtors (NAR), "can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market."
Sales Are Up
Those first-time buyers helped boost national home sales. June's existing-home sales increased for the fourth month in a row, rising 1.1 percent to a seasonally adjusted annual rate of 5.57 million. According to NAR, this is 3 percent higher than June 2015's annual rate of 5.41 million. What's more, this is the highest annual pace set since February 2007 when the annual rate reached 5.79 million. While the Northeast saw a drop in closings, every other region remained steady or posted gains. Despite the fact that some competitive areas of the country are still seeing a lack of supply and a surplus of demand, June's existing-home sales climbed in part because higher employment numbers and lower mortgage rates made purchasing a home more affordable.
The outlook for the rest of 2016 appears to be hopeful, as record-high stock prices, low mortgage rates, and job growth are all expected to accelerate the sales pace. But, warns Yun, a lack of inventory and ever-climbing home prices might temper any further acceleration. The median existing-home price climbed to $247,700 in June, a 4.8 percent rise from a year earlier. And with 2.12 million existing homes available for sale, housing inventory dropped 0.9 percent from a month ago and 5.8 percent from a year ago.
Northeast - Existing-home sales annual rate: down 1.3 percent to 760,000. Sales are still 5.6 percent higher than June 2015.
Midwest - Existing-home sales annual rate: up 3.8 percent to 1.35 million. Sales are 4.7 percent higher than June 2015.
South - Existing-home sales annual rate: unchanged from May's annual rate of 2.26 million. Sales are 3.2 percent higher than June 2015.
West - Existing-home sales annual rate: up 1.7 percent to 1.2 million. Sales are 0.8 percent lower than June 2015.