House sales in Greater Hartford surged more than 12 percent in the first seven months of this year compared with 2012, a new report Thursday showed, a welcome sign in a housing market seeking recovery.
Sales of single-family houses in July surged more than 18 percent, according to the monthly report from the Greater Hartford Assocation of Realtors, indicating that the well-watched Spring housing market — traditionally the strongest of the year — lived up to expectations. Closings in July reflect properties that went under deposit in May and June.
“This is definitely the result of a really busy Spring,” Paula Fahy Ostop, a real estate agent at William Raveis in West Hartford, said. “Rates were really low, and it may be consumers realizing that rates may not stay low forever.”
In the 57-town area tracked by the association, pending sales also rose by more than 15 percent in July, suggesting that sales could remain steady at least into the fall.
The median sale price in July — where half the sales are above, half below — rose less than one percent, from $235,750, to $237,400, the association reported.
In a typical market recovery, sales pick up and then prices. But earlier this year, strong price gains in the face of weak sales, stoked worries that prices were rising too quickly. That would reduce affordability, especially for first-time homebuyers, before a housing recovery gained significant momentum.
“The slow rise in sales price is a positive sign for those looking to buy,” Jeff Arakelian, the association’s president and chief executive, said.
Based on sales in July, there is just a little more than a six-month supply of houses for sale. A market with a six-month supply is said to favor neither buyer nor seller, giving each equal power in negotiation.
Although July was the fourth consecutive month of year-over-year sale increases, the gains have been uneven, with June turning in a meager, one percent increase. And not all houses are selling quickly; some are sitting for months with multiple price reductions.
Other obstacles could get in the way of a full-fledged housing recovery, experts said Thursday.
Chief among these are rising mortgage rates. The average for 30-year, fixed-rate home loans fell to a 3.3 percent in early May, according to mortgage giant Freddie Mac, but have jumped to 4.58 percent as of this week. Though still low by historical standards, the rates are significantly higher than borrowers are accustomed.
Further increases are expected now that the Federal Reserve is expected to pull back on measures it has been taking to keep interest rates low. The move comes amid an improving national economy.
Rising mortgage rates also could further complicate mortgage underwriting, which remains restrictive, except for borrowers with the best credit histories, experts say.
“That means we’re just not going to see that level of housing growth going forward, it’s just not sustainable,” said Donald L. Klepper-Smith, an economist at DataCore Partners, Inc. in New Haven.
Still, Klepper-Smith said job creation in the Hartford area has been the strongest among all the labor markets in the state, which bodes well for slow, housing recovery. And in July, the state overall created 11,500 jobs in July, as many as were added in the entire first half of the year.
It is possible that the Greater Hartford area, as tracked by the association, could see between a seven and ten percent increase in single-family house sales in 2013, compared with the previous year, Klepper-Smith said.
“You have to go back to before the housing downturn to see that,” Klepper-Smith said.