This morning, the National Association of Realtors (NAR) reported existing home sales for June. The resulting 4.37 million homes sold was well below expectations of 4.65 million. Analysts were also disappointed with the prior month's figure of 4.55 million, which was revised upward to 4.63 million. Again this month, the NAR attributed the drop in sales to a lack of available inventory. Months of available supply remained steady at a reading of 6.4.
Median sale prices of existing Single-Family homes rose 8% versus the prior year to $190,100. In May 2012, this figure was reported at $180,200.
"Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets," Lawrence Yun, NAR chief economist, said. "The price improvement also results from fewer distressed homes in the sales mix."
Realtor.com reported on Tuesday that housing inventory is down -19.35% for June 2012 versus June 2011. Additionally the median list price rose 2.68% for the same period. The largest price gains came in markets like Phoenix, Miami, and San Francisco.
Other recent housing reports are confirming a rebound in the market. On Wednesday, the Mortgage Bankers Association reported that weekly mortgage applications rose 17%, driven higher by record low interest rates of 3.56%.
Additionally, Housing Starts and Building permits were reported to have risen 19.3% and 23.6% year-over-year. This confirms another report that showed a 3% increase in residential construction activity for the month, as reported by Census.gov.
The National Association of Homebuilders reported that the July Housing Market Index rose to a reading of 35 for July, which was the highest jump in many years. A reading over 50 indicates that more builders believe the market is favorable than unfavorable. Analysts had expected a reading of 30.
Home prices, according to the Case-Shiller 20-city Index, rose 1.3% for the March to April 2012 period. This was following a marginal year-over-year increase for the 1st Quarter, as reported by the Federal Housing Finance Administration.
Homebuilders Toll Brothers Inc. (TOL), Lennar Corp. (LEN), KB Home (KBH), and DR Horton Inc. (DHI) should benefit from a reduced supply of existing homes. Buyers will be tempted to buy homes due to record low mortgage rates and appreciating home values. With reduced supply, they may be forced to look at new construction.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.