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Real Estate Outlook: Existing-Home Sales

Written by Carla Hill on Sunday, 28 October 2012 7:00 pm
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Existing-home sales may have experienced a slight dip in the month of September, but national median home prices are continuing their upward movement.

The national median existing-home price has seen seven straight monthly year-over-year increases and is now up 11.3 percent over September 2011. The median price across the nation is $183,900.

This stat, however, figures in distressed properties which still account for 24 percent of all sales. The average foreclosure is selling for a 21 percent discount. Short sales are discounted 13 percent on average.

All regions of the nation are seeing median home prices above year ago levels. With continuing inventory shortages in the region, the median price in the West was $246,300, which is leading the pack at a 18.4 percent higher price than September 2011.

Looking for the smallest price tag? The median price in the Midwest was $145,200, up 7.0 percent from September 2011.

A low housing supply is also affecting sales. Total housing inventory fell again in September by 3.3 percent and now represents a 5.9 month supply, or what many experts would consider a sellers market.

The National Association of Realtors (NAR) reports, "Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply."

"The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production," Lawrence Yun, NAR chief economist said.

For now, existing-home sales declined 1.7 percent for the month, though they are still 11.0 percent above year ago levels.

The face of today’s buyer remains much the same as it was last year. While first-time buyers still account for 32 percent, all cash purchases are down from last year when they made up 30 percent of all sales. Today’s number is up slightly from August at 28 percent.

Single-family home sales fell 1.9 percent while Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5 percent above the 480,000-unit pace a year ago.

Yun added that the market trend is up. "Despite occasional month-to-month setbacks, we're experiencing a genuine recovery," he said. "More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West."

Regional sales were varied this month. The South was the only region to experience a rise in existing-home sales.

The largest decline was seen in the Northeast, which fell 6.3 percent to an annual level of 590,000 sales. This rate, however, is still 7.3 percent above a year ago. In fact, all regions are seeing sales paces above year ago levels.

The next largest decline was seen in the West, which saw a 3.4 percent drop. The Midwest has the smallest change this month, slipping just 0.9 percent.

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