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Existing Home Sales at 27-Month High in August

Existing home sales rose 7.8 percent to 4.82 million in August – the highest level since May 2010 – the National Association of Realtors reported Wednesday. The median price of an existing single-family home in August was $187,400, down $400 from July but up $16,200 or 9.5 percent from August 2011.

Economists had expected the sale pace to be 4.55 million.

The percentage gain in sales was the strongest since last August when sales improved 8.9 percent month-month, the strongest month-month gain of the year. In August 2010, sales were up 8.6 percent month-month, also the strongest monthly gain of the year.

The year-year gain in the median price in August marked the sixth month in a rose prices have risen on an annual basis. The last time there were six back-to-back monthly price increases from a year earlier was from December 2005 to May 2006, the NAR said.

The August increase was the strongest since January 2006 when the median price rose 10.2 percent from a year earlier.

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 22 percent of August sales (12 percent were foreclosures and 10 percent were short sales), down from 24 percent in July and 31 percent in August 2011. Foreclosures sold for an average discount of 19 percent below market value in August, while short sales were discounted 13 percent.

Even with the improvement in the sales rate, Lawrence Yun, NAR’s chief economist, said the sales pace was below what it should be.

“The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years,” Yun said.

The inventory of homes for sale rose to 2.47 million in August, up from 2.4 million and down 18.2 percent from 3.02 million in August 2011. With the month-month increase in the sales pace, the months’ supply of existing homes on the market dipped to 6.1 months, the lowest level since January when it was 6.0 and well below the cyclical peak of 12.4 months in July 2010. The average months’ supply is 6.5 months.

With the month-month increase in sales, existing home sales continued the steady uphill climb from the cyclical trough of 3.39 million in July 2010. In the first eight months of this year the sales pace has averaged 4.575 million compared with 4.251 million in the first eight months of 2011.

Regionally, existing-home sales in the Northeast rose 8.6 percent in August to an annualized rate of 630,000 and are 8.6 percent above August 2011. The median price in the Northeast was $249,200, down from $254,200 in July but up 0.6 percent, $1,500 from August 2011.

Existing-home sales in the Midwest increased 7.7 percent in August to a pace of 1.12 million and are 17.9 percent higher than a year ago. The median price in the Midwest was $152,400, down $1,300 from July but up $11,000 or 7.8 percent from August 2011.

In the South, existing-home sales rose 7.3 percent to an annual level of 1.9 million in August and are 11.1 percent above August 2011. The median price in the region was $160,100, down $600 from July but up 6.5 percent or $9,800 in the last year.

Existing-home sales in the West rose 8.3 percent to 1,17 million in August, unchanged from a year ago. The median price in the West was $242,000, up $800 from July and $33,900 or 16.3 percent from August 2011.

The sales increase came in a month in which the Bureau of Labor Statistics reported the number of real estate jobs fell 5,200 and the number of underwriting jobs dropped 1,100.

The NAR report of sales tracks closed transactions, thus reflecting economic conditions two months earlier, in June, when the unemployment rate was 8.2 percent, unchanged from May.