Fourth Month of Rising Home Sales

July marked the 4th month in a row that existing home sales have risen and did so with a larger than expected increase.

With a 7.2% increase in home sales this July out pacing the 5% seen in June, the National Association of Realtors (NAR) says this is the largest single month increase in existing home sales since they began to track such numbers back in 1999.

So what is driving this increase in sales? Its the converging of two conditions. High inventory which is pushing prices lower and historically low interest rates combined with new buyer tax incentives.

The meeting of these conditions have created an atmospherethat has made buyers comfortable enough to reenter the market. While its important to know that home sales are up, its also important for both buyers and sellers to realize that this is a condition of lower prices and increased inventory, not a rise driven by speculative home purchases or an expectation of rapid value appreciation. The market is slowly returning to the mentality that drove the market the decades before the housing bubble began to grow. 

Home ownership is a solid long term investment that, over the course of multiple years, has traditionally shown an appreciation that has out paced inflation and contributed to a healthy investment portfolio.

While this increase in sales is widespread the new buyer love has not extended to every part of the country. The Northeast has seen the largest bump with a 13.2 % increase while the West was the only region with a decline, coming in at -1.13%. While its promising to see such numbers in the market its important to remember that ultimately continued growth will be tightly attached to the national unemployment rate.  To see sustained recovery and the return ofan appreciating market we will need to see the trend of increasing unemployment stale out and begin to turn the corner as well.