The industry's recovery has grown more consistent, though it remains sluggish and uneven. July sales were below the 4.6 million annual pace reached in April and May. And the annual sales pace is below the roughly 5.5 million that economists consider healthy.
Still, sales have increased 10.4 percent compared with a year ago.
The sales increase last month was broad-based. Purchases rose for single-family homes and condominiums. And sales rose in three of four U.S. regions. They were flat in the West.
"Rising single-family home sales indicate that households are feeling increasingly confident taking on larger purchases as their (finances) improve," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, said in a note to clients.
The sales gains are being driven in part by higher-priced homes. Luxury home builder Toll Brothers said Wednesday that its net income jumped 46 percent in the May-July quarter.
"We are enjoying the most sustained demand we've experienced in over five years," CEO Douglas Yearley said.
The Realtors' report said the median home price dipped in July from June to $187,300. Still, that's up 9.4 percent from a year ago. It's the fifth straight month in which the median price, as measured year over year, has risen.
Cities Where Homes Sell the Fastest
Home Sales: Rise Reflects Steady Improvement
Homes are selling faster in the majority of U.S. markets than they were a year ago, according to data recently released by Realtor.com. Ten areas in particular are sweet spots if you're selling a home.
The metropolitan areas on this list of the cities where homes sell the fastest tend to be in states that have been hardest hit by the economic downturn. Five of the metropolitan areas are in California.
Click through the gallery to find out where homesellers have the best shot at getting their house sold -- and fast.
Average number of days homes spend on market: 48 Median home price: $185,000 (73rd highest) Population: 4,192,887 (20th highest) Unemployment: 7.72% (65th highest)
The entire metropolitan area of Phoenix-Mesa, which has a population of more than 4 million, had 13,912 homes listed on the market in June -- the 20th highest of all the metropolitan areas surveyed. This is a drop of almost 40 percent since the same time last year. Speedy home-selling may be boosting the housing market in the Phoenix area.
Average number of days on market: 47 Median home price: $99,000 (the lowest) Population: 4,296,250 (18th highest) Unemployment: 11.21% (ninth highest)
Unlike many of the metropolitan areas on the list with high home values, in Detroit, there are many bargains to go around for homebuyers. Of the 146 regions surveyed by Realtor.com, only Detroit had a median home value below $100,000 last month. Housing prices in the area did not manage to crack through the six-figure ceiling despite increasing 10 percent from last year, a much higher rate than the national average of 2.68 percent increase. This has sparked much interest among buyers.
Average number of days on market: 45 Median home price: $549,000 (third highest) Population: 1,836,911 (39th highest) Unemployment: 8.89% (34th highest)
California was hit hard during the housing downturn, and San Jose has been no exception. From the first quarter of 2007 to the fourth quarter of 2011, home prices plunged 32.9 percent. Nevertheless, the median price of one of the 3,621 houses listed is still an impressive $549,000, the second highest of all home prices on the list and the third highest of all metropolitan areas surveyed. Buyers should not dawdle either.
Average number of days on market: 45 Median home price: $725,000 (the highest) Population: 4,335,391 (17th highest) Unemployment: 7.52% (68th lowest)
While Detroit’s median home listing price is less than $100,000, the median home price of $725,000 in the San Francisco area is the highest measured in the Realtor.com report. Yet, despite the high prices of homes, there isn't too much idle time on the market, as the average home is sold in 45 days.
Average number of days on market: 45 Median home price: $350,000 (17th highest) Population: 3,439,809 (21st highest) Unemployment: 7.40% (56th lowest)
The Seattle metropolitan area has a population of more than 3.4 million people, yet only 6,486 homes available for sale. With such conditions, it is not surprising that homes will get snatched up pretty quickly. Houses on average sit just 45 days on the market, which is down nearly 34% since last year.
Average number of days on market: 44 Median home price: $149,500 (23rd lowest) Population: 839,631 (60th lowest) Unemployment: 14.14% (fourth highest)
Bakersfield joins many other California cities in selling homes fast, but houses in the area are not likely to have San Francisco-like prices. The median home price of $149,500 is the lowest on this list, except for Detroit, and only a little more than a fifth of the median price of a San Francisco house.
Average number of days on market: 43 Median home price: $174,900 (58th lowest) Population: 930,450 (62nd highest) Unemployment: 15.54% (second highest)
Fresno has many similarities to Bakersfield. The median home price of $174,900 recorded in June is far lower than other California cities such as San Francisco and San Jose, but it is up 10 percent from a year earlier. Similar to Bakersfield, the 2,237 houses on the market are nearly half (49.1 percent) the number that were available last year.
Average number of days on market: 43 Median home price: $289,500 (23rd highest) Population: 380,821 (20th lowest) Unemployment: 6.13% (22nd lowest)
Prospective homebuyers in Anchorage really do not have the option of being choosy. There are only 1,120 houses on the market, a decline of about 29 percent from the previous year. This is the fourth-smallest number of home listings in all metropolitan areas surveyed.
Average number of days on market: 33 Median home price: $269,000 (27th highest) Population: 2,543,482 (27th highest) Unemployment: 7.51% (67th lowest)
The 33 days to sell a house in the Denver area is actually up by 10 percent, one of the very few metro areas to see an increase in the time it takes to sell a home. Denver was not as hard hit by the housing bust as many other metropolitan areas. Home prices from their peak in the first quarter of 2006 to the fourth quarter of 2011 dropped just 11.1 percent, well below the national average of 34.2 percent.
A big reason for the price increase is that sales for pricier homes have picked up, while sales of homes below $100,000 have fallen, the Realtors' group said.
The number of first-time homebuyers, critical to a housing rebound, rose to 34 percent of sales, up slightly from June. In a healthy market, first-time buyers make up about 40 percent of sales.
Purchases are being restrained by low levels of homes available for sale and by tight credit standards, the Realtors' group said.
More Positive Signs
Other recent reports have contributed to the picture of a healing industry. Home prices are rising nationwide. And builders are growing increasingly confident because they're seeing more traffic from potential buyers. An index of builder confidence rose to its highest level in five years in August.
Builders responded by applying for the largest number of building permits in nearly four years last month. They broke ground on slightly fewer new homes in July than in June. But that was after the number of housing starts had reached a 3½-year high in June.
In July, the number of unsold homes ticked up to 2.4 million. It would take about 6.4 months to exhaust that supply at the current sales pace. That's just above the six months' inventory that typically exists in a healthy economy.
Even with near-record-low mortgage rates, many would-be buyers are having difficulty qualifying for loans or can't afford the larger down payments being required by banks.
Hiring picked up a bit in July, which could support more home sales in the coming months. Job growth helps consumers feel more secure about their finances and typically encourages more of them to buy a house.
Employers added 163,000 jobs last month, the most since February. Job gains had averaged only 73,000 in the April-June quarters, raising fears that the economy was faltering and might even slip into recession.
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