Sales of existing homes were strong in September, up 9.4% to a seasonally-adjusted annual pace of 5.57 million units, including single-family homes, townhomes, co-ops, and condominiums, according to a report released today by the National Association of Realtors (NAR).

The September rate of sales was 9.2% higher than from a year ago, and sales activity is at the highest level in over two years, the NAR said. According to early reports from a consumer study that won't officially be released until November 13th, over 45% of sales in the past year have been to first-time home-buyers. A separate study also shows that distressed homes accounted for 29% of sales activity in September.

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 underperforming. “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.

Yun said it looks like home prices are stabilizing, but that to revive the broader economy we need a steady supply of qualified buyers to reduce home inventories, "returning us to a period of normal, steady price growth and to fully remove consumer fears." He said, "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.”

Charles McMillan, NAR President and 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.

At the end of September, there was a 7.8 month supply of homes on the market at the current sales pace. The total housing inventory fell in September 7.5% to 3.63 million homes for sale. In August, there was a 9.3 month supply of homes on the market. Unsold inventory totals are 15% lower than they were 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.

The national median price for existing homes of all housing types was $174,900 in September. This is 8.5% lower than from year ago, but lower prices of distressed properties continue to downwardly distort the median price of traditional homes.

By home type, sales of single-family homes increased 9.4% in September to a seasonally-adjusted annual rate of 4.89 million, and are 7.7% above the annual pace of 4.54 million units from September 2008. The national median price for existing single-family homes was $174,900 in September, 8.1% lower than it was a year ago.

Sales of existing condominiums and co-ops increased 9.7% to a seasonally-adjusted annual rate of 680,000 units in September, and are 9.7% above the pace of 561,000 from a year ago. The national median home price in September was $175,100, 11.7% lower than from a year ago.

All regions experienced an increase in sales for September. Existing home sales in the West spiked 13% to an annual pace of 1.3 million, 5.7% higher than September 2008. The median home price in this region is $219,000, 15% lower than it was a year ago.

In the Midwest, existing home sales surged 9.6% in September to an annual pace of 1.25 million at a rate 7.8% higher than a year ago. The median home price of $147,600 is 1% below the price from a year ago.

Existing-home sales in the South jumped 9% to annual rate of 2.06 million homes at a pace 10.8% higher than from a year ago. The median home price in the South was $153,500 and is down 7.6% from September 2008.

Sales of existing homes in the Northeast rose 4.4% to an annual rate of 950,000 in September, 11.8% higher than a year ago. The median home price of $234,700 is 7% lower than it was a year ago.


Source:
National Association of Realtors