Due to falling real estate prices and rising foreclosures on the West Coast, sales of existing homes rose to its highest level in 13 months and highest percentage increase in five years, according to a report released today by the National Association of Realtors (NAR). The increase resulted from buyers responding to improved affordability, the organization stated.
Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 5.5% to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4% higher than the 5.11 million-unit pace in September 2007.
Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” he said. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said low home prices and low interest rates have been attracting buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” he said. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04% in September from 6.48% in August; the rate was 6.38% in September 2007.
Total housing inventory at the end of September fell 1.6% to 4.27 million existing homes available for sale, which represents a 9.9-month supply² at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly reductions since inventories peaked in July.
The national average existing-home price for all housing types was $191,600 down in setember 9.0% less than a year ago when the median was $210,500. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40% of transactions. These are pulling the median price down because many are being sold at reduced prices,” Yun explained. “The current market is not being dominated by speculative investors. Rather, 80% of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”
Single-family home sales increased 6.2% to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8% above the 4.45 million-unit level a year ago.
Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 560,000 units in September.
Regionally, existing-home sales in the West jumped 16.8% to an annual rate of 1.25 million in September, and are 34.4% higher than September 2007. The median price in the West was $253,600, down 18.5% from a year ago.
In the Midwest, existing-home sales increased 4.4% to an annual pace of 1.19 million in September, but are 2.5% down from a year ago. The average price in the Midwest was $152,500, which is 7.9% lower than September 2007.
Existing-home sales in the South rose 2.2% in September to a pace of 1.90 million but stay 7.8% below September 2007. The average price in the South was $167,200, down 4.1% from a year ago.