Existing home sales have dropped, are new home sales going to rise?

      The number of existing homes sale dipped 1.2% to an annual rate of  5.08 million in June from a downwardly revised 5.14 million in May according to the National Association of Realtors. The plus side of that is that although sales dipped a little they were still up 15.2% compared to June 2012. Rising mortgage rate may have also taken some of the steam out of the market.

        Although we're still dealing with a large pent-up demand higher interest rates will bite into high-cost regions in metro areas such as California, Hawaii and New York City. A lack of a full inventory is also playing a part in holding back on the sales of homes. The problem with some places is that buyers simply could not find suitable homes. In June there was a 5.2 month supply at what the current sales pace is which in down 7.6% from a year ago.

     The conditions of the inventory will continue to broadly favor sellers and also contribute to an above-normal growth of price. Indeed, with the median of home prices showing a jump of 13.5% from June 2012 up to $214,200. This shows 16 months of consecutive gains. The rising drop in foreclosures and short sales has also helped contribute to the price gains.