“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates. Combined, these factors are helping to unleash a pent-up demand,” Lawrence Yun, the association’s chief economist, said in a statement, adding that under more normal circumstances, the annual sales rate could reach 5 million to 5.5 million units annually. “However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”
Those strict lending standards that Yun referenced could get stricter in coming days. Government-backed mortgage giant Fannie Mae, which provides funding for a substantial amount of the nation’s home loans, has informed lenders that it will tighten qualification requirements for new buyers or those refinancing their homes, according to a Bloomberg News report. The changes could include higher mandatory credit scores for some loans.
Such changes could make it more difficult for some would-be buyers to qualify for a mortgage. While there is a shortage of housing inventory in some areas, there seems to be a growing number of willing buyers.
Regionally, sales of existing homes rose most in the Northeast during July, at 7.4 percent, according to the association’s report. Sales also rose slightly in the South and the Midwest but were virtually unchanged in the West, though even there they remained higher than a year ago.
Distressed homes — including foreclosed-on homes and short sales that are sold at steep discounts — accounted for 24 percent of sales in July, down slightly from the previous month. Meanwhile, first-time buyers accounted for more than a third of purchasers in July, up from the previous month but still below historical averages.
A growing body of evidence in recent months has pointed to better days ahead for the nation’s long-suffering housing market. Glimmers of optimism have appeared in a wide range of data showing increasing sales of existing homes — homes selling faster than in the past, an uptick in residential construction, stabilizing prices in many areas, falling rental vacancy rates and historically low interest rates that have made purchasing more realistic for many aspiring buyers.
The Washington area has fared particularly well, in large part because the region mostly avoided the crippling unemployment and plummeting home prices that have plagued much of the country. The area produced about 47,000 sales last year, and its unemployment rate remains one of the country’s lowest.
Locally, sales volumes and prices have continued to climb, and inventories are at their lowest point since about 2005, according to recent data from Alexandria-based Delta Associates.
The improvements this year in many areas of the country remain only part of a still-gloomy overall housing market. About 2 million homes were in some stage of foreclosure in the early part of 2012, with more borrowers facing a similar predicament. The number of homeowners behind on their payments has decreased but remains far above normal. And an estimated 11 million homeowners owe more than their houses are worth.
But if the market continues its trajectory for the rest of this year and into 2013, as many analysts expect, those numbers should continue to change for the better.