Existing home sales up 7.7% in August

Sales of existing homes rose 7.7% in August despite tighter lending standards and appraisal problems, according to the National Association of Realtors. The trade group said sales of single-family homes, town homes, condos and co-ops increased to a seasonally adjusted rate of 5.03 million units from 4.67 million in July. NAR said August existing home sales were 18.6% higher than 4.24 million a year ago. Lawrence Yun, chief economist at NAR, said some of the August gain is the result of delayed sales from prior months, and favorable affordability and rising rents also contributed. “The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price,” according to NAR President Ron Phipps. “Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors can often give buyers advice to help them overcome some of the financing obstacles,” he said. Investors accounted for 22% of sales in August, up from 18% in July and 21% a year ago, according to NAR. Cash sales accounted for 29% of transactions last month, flat with the prior month and up slightly from a year ago. “Investors were more active in absorbing foreclosed properties,” Yun said. “In additional to bargain hunting, some investors are in the market to hedge against higher inflation.” NAR said 18% of members reported at least one contract failure in August, up from 16% in July and 9% a year ago. Most of the cancellations were due to declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price, according to NAR. The inventory of existing homes for sale fell 3% in August to 3.58 million, representing an 8.5-month supply, which is down from 9.4 months worth of supply in July. The median price on existing home sales fell to $168,300 last month, down from $174,000 in July and 5.1% lower than a year earlier, according to NAR. Sales of distressed properties accounted for 31% of all sales in August, up from 29% in July and down from 34% a year ago. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw