Existing-home sales fell in June compared to May, but make no mistake about it: The housing market continues to improve.
According to the National Association of Realtors, previously occupied single-family homes sold last month at a seasonally adjusted annual rate of 4.5 million units. While this was 1.1% below the rate in May, it was nevertheless 14.5% above the same month last year.
"Affordability conditions remain favorable in most of the country, and we're still dealing with a large pent-up demand," NAR's chief economist Lawrence Yun said. "However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market."
In addition to the number of units sold, the NAR's data confirmed the continuation of at least two ongoing trends. First, home prices are heading higher. The trade association's data showed that the national median existing-home price for all housing types was $214,200 last month, or 13.5% higher than June of 2012.
And second, the supply of homes continues to be depressed. While the listed inventory of existing homes available for sale rose in June by 1.9% over the previous month, it's nevertheless 7.6% below the level last year.
The big question going forward revolves around the impact of rising mortgage rates. Over the last two months, the interest rate on a 30-year fixed-rate mortgage shot up by more than 100 basis points, from less than 3.5% in May to approximately 4.5% today.
Paradoxically, the impact on the housing market thus far appears to have been favorable. To wit, Wells Fargo and JPMorgan Chase both reported increases in purchase-money mortgage originations last month. On a year-over-year basis, Wells Fargo's were 46% higher while JPMorgan's were up by 44%.
Later this week, we'll see if the same thing can be said about the market for new homes. On Wednesday, the Commerce Department is slated to release its estimate of new-home sales for the month of June. And on Thursday, the nation's largest homebuilders, D.R. Horton and PulteGroup , will report quarterly results.
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