The National Association of Realtors® reported home sales results for existing (resale) homes during the month of September, saying in its press release that home sales “bounced back strongly in September with first-time buyers driving much of the activity.” The NAR noted that September showed five gains in home sales in the past six months. It’s important to note that the gains the Association refers to are gains in volume of home sales, not home price gains. The national median home price was down 8.5% from September 2008.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August. This volume of home sales is 9.2 percent higher than the pace of sales in September 2008. Home sales were at the highest level in over two years, since July 2007, when 5.73 million homes sold as counted by the National Association of Realtors®. Low interest rates contributed to sales improvement.
NAR attributed much of the boost in home sales to first-time home buyers responding to the tax credit, which is scheduled to expire at the end of November. NAR is lobbying hard for an extension of that tax credit, and an expansion to all homeowners, but the likelihood that Congress and the Obama administration will go along with the home buyer tax credit extension dims as other economic issues require federal resources. Indeed, on Monday, the stock market declined, lead by housing stocks based on the financial markets’ fear that the tax credit would expire.
Lawrence Yun, NAR’s chief economist said in a press release accompanying the data: “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….” The president of NAR opined, ““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.”
Total housing inventory at the end of September fell 7.5 percent from August when there was a 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago. The question is whether this can continue in the face of expected foreclosure increases this fall and winter. When those bank-owned properties hit the multiple-listing-services across the country in the next few months, inventory numbers may not look as good as they do now, and prices will continue to fall. Of course, the National Association of Realtors® press release didn’t say that.
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