Purchases of previously owned homes rose in July to the highest level since February 2007. The median price of an existing home climbed 5.6% to $234,000 from last year while the number of previously owned homes on the market fell 0.4% to 2.24 million. At the current sales pace, it would take 4.8 months to sell those houses compared with 4.9 months at the end of June, less than a 5 months’ supply is considered a tight market.
Demand for housing is growing in part due to healthy gains in the labor market as well as continuously low mortgage rates. Residential starts rose in July to a 1.21 million annualized rate, the most since October 2007. A limited number of available properties is keeping prices elevated, giving homeowners the financial flexibility to trade up, which is unfortunately also hurting first-time buyers. Meanwhile as a result of the housing shortage, rents are rising faster and the number of residential construction is at its highest since 2007.
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