Home Sales Reports in Today’s News

A more accurate summary of the housing news is: “Single-family existing-home sales were stable in October while the condo sector was down,” as the National Association of Realtors^® introduced its report, upon which the Journal based its more sensational lead. Here are the facts that matter to those concerned about the direction of the Flagstaff real estate market:

• Total sales of existing homes (not new homes) for October -- including single-family, townhomes, condominiums and co-ops – eased by 1.2 percent to a seasonally adjusted annual rate of 4.97 million units from 5.03 million units in September, and are 20.7 % below the 6.27 million-unit pace set in September 2006.
•  The national median existing-home price (including all existing home types) was $207,800 in October 2007, which is down 5.1% from October 2006 when the median was $218,900. NAR attributes the price decline to unavailability of jumbo loans that slowed sales in high-price markets, and that dragged down the national median.

The numbers reported are a national aggregate and can be quite misleading with respect to local market conditions. Broadly speaking, home prices in most areas are up modestly or fairly stable, as reported in NAR’s release last week of home sale information for the 3d Quarter of 2007. Today’s release shows that some regions have price gains, but not yet in the West.  In Flagstaff, we’re in the midst of the downward trend because the Flagstaff market was one of the later areas to start to fall. These statements are the subjects of my recent blog posts:

November 26: National Real Estate Report Shows Upswing in Most Metropolitan Markets Giving Hints About Flagstaff's Market

October 10: The Flagstaff Residential Real Estate Market Drifted Lower in the 3d Quarter

As for the media’s continued drum-beat about the “credit crunch” and its doom-and-gloom implications for the housing market, here’s what NAR’s chief economist had to say today:

 “[M]ortgage problems were peaking back in August when many of the sales closed in October were being negotiated.  We continue to see the biggest impact in high-cost markets that rely on jumbo loans. Mortgage availability has improved as evidenced by much lower mortgage interest rates and a sharp jump in FHA endorsements for home purchases. 

 
“A trend away from subprime mortgages to FHA loans, which often carry much lower interest rates, is a positive development for consumers and the housing market going forward.  Still, it will take some time for the change to yield a measurably higher closed sales volume in the aftermath of the subprime collapse.  In the near term, we expect home sales to remain fairly stable.”

So, as our mortgage blogging partner said today, now is a good time for buyers to get qualified and get moving on their home purchases. When expectations that “home sales will remain fairly stable” appear in a falling market, it means that the trough is about to be reached and prices will begin to climb. Waiting may cost you money, not only if home loan rates go up, as Liz warned today, but because actual home sales prices may start to climb.

Click here to read the National Association of Realtors^® October existing home sales data by region as well as national aggregates, with comparisons to prior years.