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NAR: Big rebound in existing-home sales shows first-time buyer momentum!
Existing-home sales bounced back strongly in September with first-time buyers
driving much of the activity, marking five gains in the past six months, according
to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and
co-ops – jumped 9.4 percent to a seasonally adjusted annual rate of 5.57
million units in September from a level of 5.10 million in August, and 9.2 percent
higher than the 5.10 million-unit pace in September 2008. Sales activity is at the
highest level in over two years, since it hit 5.73 million in July 2007.
Lawrence Yun, NAR chief economist, said favorable conditions matched with a
tax credit are boosting home sales. “Much of the momentum is from people
responding to the first-time buyer tax credit, which is freeing many sellers to
make a trade and buy another home,” he said. “We are hopeful the tax credit
will be extended and possibly expanded to more buyers, at least through the
middle of next year, because the rising sales momentum needs to continue for a
few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is under performing. “Despite
spectacular gains in the stock market, principally from the financial sector
recovery, most of the 75 million home owning families have more wealth tied to
their homes. Home values could soon turn consistently positive and help the
broad base of middle-class families, but we are not there yet,” he said. “We’re
getting early indications of price stabilization, but we need a steady supply of
qualified buyers to meaningfully bring inventories down and return us to a
period of normal, steady price growth and to fully remove consumer fears,
which would then revive the broader economy. Without a firm foundation for
middle-class wealth recovery, the post-recession economic growth likely will be
one of the weakest in U.S. history.”
Early information from a large annual consumer study to be released November
13, the 2009 National Association of Realtors® Profile of Home Buyers and
Sellers, shows that first-time home buyers accounted for more than 45 percent
of home sales during the past year. A separate practitioner survey shows that
distressed homes accounted for 29 percent of transactions in September.
NAR President Charles McMillan, a broker with Coldwell Banker Residential
Brokerage in Dallas-Fort Worth, said affordability conditions remain historically
high. “Potential first-time buyers can take heart in that affordability conditions
this year are the highest on record dating back to 1970, but with the first-time
buyer tax credit scheduled to expire at the end of next month, people could hold
back from entering the market,” he said.
“Our read is that housing overshot on the downside because homes are selling
for less than replacement construction costs in much of the country, and the
home price-to-income ratio has fallen below the historical average,” McMillan
said.
Total housing inventory at the end of September fell 7.5 percent to 3.63 million
existing homes available for sale, which represents a 7.8-month supply at the
current sales pace, down from an 9.3-month supply in August. Unsold inventory
totals are 15.0 percent below a year ago.
“The current housing supply is the lowest we’ve seen in two and a half years,”
Yun said. “If we could continue to absorb inventory at this pace, home prices
would return to normal, modest appreciation patterns next year.
According to Freddie Mac, the national average commitment rate for a 30-year,
conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19
percent in August; the rate was 6.04 percent in September 2008.
The national median existing-home price for all housing types was $174,900 in
September, which is 8.5 percent lower than September 2008. Distressed
properties continue to downwardly distort the median price because they
generally sell at a discount relative to traditional homes in the same area.
Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate
of 4.89 million in September from a pace of 4.47 million in August, and are 7.7
percent above the 4.54 million-unit level in September 2008. The median
existing single-family home price was $174,900 in September, which is 8.1
percent below a year ago.
Existing condominium and co-op sales jumped 9.7 percent to a seasonally
adjusted annual rate of 680,000 units in September from 620,000 in August,
and are 9.7 percent above the 561,000-unit pace a year ago. The median
existing condo price was $175,100 in September, down 11.7 percent from
September 2008.
Regionally, existing-home sales in the Northeast increased 4.4 percent to an
annual level of 950,000 in September, and are 11.8 percent higher than
September 2008. The median price in the Northeast was $234,700, down 7.0
percent from a year ago.
Existing-home sales in the Midwest jumped 9.6 percent in September to a pace
of 1.25 million and are 7.8 percent above a year ago. The median price in the
Midwest was $147,600, which is 1.0 percent below September 2008.
In the South, existing-home sales rose 9.0 percent to an annual level of 2.06
million in September and are 10.8 percent higher than September 2008. The
median price in the South was $153,500, down 7.6 percent from a year ago.
Existing-home sales in the West surged 13.0 percent to an annual rate of 1.30
million in September and are 5.7 percent above a year ago. The median price
in the West was $219,000, which is 15.0 percent below September 2008. ©
2009 Florida Realtors®