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 rate1 of 5.57 million units in September from a level of 5.10 million in August, and are 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 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. "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 an 7.8-month supply2 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 price3 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 price4 was $175,100 in September, down 11.7 percent from September 2008.
Regionally, 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.
Virginia's housing markets appear to be moving upward, with the lowest point seen in fourth quarter 2008 and steadily improving since then, according to the third quarter 2009 home sales report released today by the Virginia Association of Realtors.
"There seems to be no doubt now that we have hit the bottom and are moving back up, in terms of both price and sales activity," commented VAR President John Powell of Colonial Heights. "We are now in our third consecutive quarter of marked improvement."
Total existing home sales in Virginia are up 5.3 percent in the third quarter compared to the second quarter numbers, and have reached the highest quarterly total in 2009. The statewide median sales price is up 2.2 percent over the second quarter and has increased about $28,000 this year. Nationally, inventory levels have trended down significantly, reaching the lowest level in 2008 and 2009, indicating the market is rebounding across the country as well.
In Central Virginia sales in the third quarter of 2009 advanced 9.5% over the second quarter and 1.8% over the third quarter of 2008. The median sales price has declined again in the Central region, falling 2.5% since last quarter and 11.8% compared to the third quarter of 2008.
The Richmond market is still challenging but showing some positive signs as well. Home sales in Virginia including the Richmond area -- are improving. Pricing continues to fall however it may be bottoming out. We continue to see good signs as first time home buyers are getting into the market and more expensive homes are selling as homeowners are starting to trade up.
*Information courtesy of the National Association of REALTORS and The Virginia Association of REALTORS.
About Skye Bruce:
Skye Bruce, a former professional soccer player, offers the same dedication to her clients that made her a 1st Team All American and Final Four MVP. She holds a MBA from the University of Richmond and brings a unique business perspective to real estate which clients value. In 2006, 2007 and 2008, Skye Bruce was named the #1 Individual RE/MAX Agent in the Central Virginia Area. She is currently ranked in the top 1% of RE/MAX Agents in the World, is a member of the RE/MAX International Hall of Fame and a winner of the prestigious RE/MAX Chairman’s Club Award, the highest single year production honor given to a REMAX Agent.
These reports reflect the views and opinions of their authors and are not necessarily the views and opinions of Realty Times.
