Home sales surge in third quarter, price decline slows
Sales increases were seen in 45 states and the District of Columbia, with 28 states experiencing double-digit gains. Lawrence Yun, NAR chief economist, said in a press release, "We can't underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector. It has given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal."
House prices, however, didn't fare as well as house sales. During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008. Only 30 areas had price gains. The national median existing single-family price was $177,900, which is 11.2% below the third quarter of 2008.
Price Decline is Moderating
While we are still seeing some decline in prices, that decline is moderating. According to Yun, "a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market."
Yun does expect foreclosures to continue to come on the market, but thinks "rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures."
The biggest sales increase between the second and third quarters was in North Dakota, up 42.3%. Next to see huge gains was Rhode Island, which rose 26.5%. Pennsylvania sales increased 25.6%.
The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2% from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3% to $115,600, followed by Oklahoma City, at $144,100, up 9.1% from a year ago.
Biggest Sales Increase in Northeast
Regionally, existing home sales in the Northeast surged 16.7% in the third quarter, on pace for the sale of 930,000 units, which is up 6.9% over last year. The median existing single-family home price in the Northeast declined 9.4% to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8% from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6%; and the Pittsburgh area, where the median price rose 1.5% to $124,600.
In the Midwest, existing home sales jumped 13.2% in the third quarter, keeping on pace to sell 1.20 million units, which is up 5.2% from a year ago. The median existing single-family home price in the Midwest dropped 5.5% from the same quarter a year ago to $150,200.
In the South, existing home sales rose 11.3% in the third quarter to an annual rate of 1.97 million, which is 5.9% higher than the third quarter of 2008. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from a year earlier.
Existing home sales in the West increased 5.6% in the third quarter to an annual rate of 1.19 million, which is 4.6% above a year ago. The median existing single-family home price in the West was $224,000 in the third quarter, down 16.4% from the third quarter of 2008.
Clearly the market appears to be turning around. While some question whether there is enough demand to keep up with the number of foreclosures expected to hit the market in the next year, reports seem to indicate the demand may finally be there. Hopefully Yun is right when he predicts that home prices will stabilize by next spring.
Lita Epstein has written more than 25 books, including The 250 Questions Everyone Should Ask About Buying Foreclosures.