Housing markets show continued signs of strengthening according to reports released on Wednesday. The National Association of Realtors® reported that sales of pre-owned homes rose to 5.49 million in June as compared to May’s revised reading of 5.32 million pre-owned homes sold and expected sales estimated at 5.42 million sales. Expectations were based on May’s original reading of 5.35 million sales. June’s reading was the highest since February of 2007. Readings for existing home sales are calculated on a seasonally adjusted annual basis.

Buyers Gain Confidence in Labor Markets, Rush to Beat Rate Hikes

Lawrence Yun, chief economist for the National Association of Realtors® said that buyers may be influenced by rising mortgage rates and encouraged by improving job markets. Analysts expect the Federal Reserve to raise its target federal funds rate this fall, which means that mortgage rates along with consumer lending rates will rise.

The national median home price rose by 6.50 percent annually to $236,400, also a record reading.

While this news paints a rosy picture for housing markets, challenges remain. Strict mortgage standards are an obstacle for first time and moderate income buyers as well as for buyers with less than stellar credit scores. While construction of new homes is increasing, the majority of projects are apartment complexes. 41 percent of housing starts in June were multi-family projects with five or more units. This data falls in line with stricter mortgage standards and a trend for millennials, an expected group of first-time homebuyers, preferring to rent in large cities rather than moving to suburban areas.

FHFA House Prices Rise in May

The Federal Housing Finance Agency (FHFA) reported that home prices associated with mortgage loans owned or backed by Fannie Mae and Freddie Mac was unchanged from April’s revised reading of 0.40 percent month-to-month home price growth. April’s month-to-month reading was originally reported at 0.30 percent. FHFA home prices were up 5.70 percent year-over-year in May.

FHFA reported that year-over-year home price growth was positive in all nine census divisions, with the lowest growth rate of 0.90 percent in the Mid Atlantic division and the highest growth rate of 8.40 percent in the Pacific division.

The National Association of Realtors® reported that sales of existing homes dropped to a seasonally-adjusted annual rate of 4.93 million as compared to expectations of a 5.18 million existing homes sold. Projections were based on October’s reading of 5.25 million. November’s reading showed a 6.10 percent dip in sales of existing homes and was the lowest reading since May.

Fed Chair Janet Yellen said last week that the less than robust housing recovery is due in part to tight lending standards. Lawrence Yun, chief economist for the National Association of Realtors®, said that November’s reading was likely an aberration due to volatility in the stock market, which could have dampened home buyer enthusiasm.

Analysts expect easing of mortgage guidelines and an improved job market to help increase home sales. The national median price for existing homes rose to $205,300 in November, which represented a year-over-year increase of five percent. Inventories of used homes rose to a 5.10 month supply, which was more than double the 2.01 month supply of existing homes for sale in November 2013.

FHFA Reports Year-Over-Year Increase in Home Prices

The Federal Housing Finance Agency (FHFA) reported a monthly gain of 0.60 percent for home prices associated with mortgages owned or backed by Fannie Mae and Freddie Mac. FHFA said that home prices rose 4.50 percent year-over-year in October as compared to the October 2013 reading of 4.40 percent year-over-year. The increase in FHFA home prices was likely connected to a decrease in foreclosure rates and fewer distressed sales.

FHFA house prices encompass the nine census divisions. On a month-to-month basis, FHA home prices rose by 0.60 percent in October. Month-to-month home prices by census division ranged from -0.30 percent for the Pacific division to +1.50 percent for the Atlantic division. On a year-over-year basis, home prices increased for all nine regions and ranged from +0.80 percent in the Mid-Atlantic division to +6.00 percent in the Pacific division.