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Existing Home Sales in Third Quarter Rise in Most States

Existing-home sales continue to rise in most states across the U.S. for the third quarter, according to a report released today by the National Association of Realtors (NAR). From the second quarter, sales rose in 45 states and the District of Colombia - with 28 states and D.C. experiencing gains in the double digits.

Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s 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.”

Nationally, existing home sales in the third quarter increased 11.4% from the seasonally-adjusted pace of 4.76 million units in the second quarter. The third quarter reading of 5.30 million units is 5.9% above the annual pace of 5.01 million units from a year ago.

Regionally, existing-home sales in the Northeast surged 16.7% in the third quarter to an annual pace of 930,000 units and are 6.9% higher than in the third quarter of 2008. The median existing home price of $244,500 has declined 9.4% from the same quarter a year ago.

Sales in the South increased 11.3% to a pace of 1.97 million units and are 5.9% higher than they were a year ago. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from the third quarter of 2008.

In the West, sales were up 5.6% for the third quarter at a pace of 1.19 million and sits 4.6% higher than last year. The median existing single-family home price of $224,000 in this region is 16.4% lower than it was a year earlier.

The Midwest had a third quarter gain in sales of 13.2% to a pace of 1.20 million, at 5.2% above the pace in the third quarter of 2008. The median home price in the Midwest for the third quarter was down 5.5% from the same period a year ago at $150,200.

By state, the largest gains in the third quarter for existing home sales were in North Dakota - up 42.3%, Rhode Island - up 26.5%, and Pennsylvania - up 25.6%.

Home prices have also stabilized in many metro areas, but still remain lower than prices from a year ago in 123 out of 153 metro areas surveyed by the NAR. The national median price for existing single-family homes in the third quarter was $177,900, 11.2% lower than it was a year ago. The median home price continues to be downwardly skewed due to a large percentage of foreclosures and short sales - 30% of all transactions in the third quarter are reported to be distress sales.

“The decline in the national median price has moderated recently, and 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 said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

Historically low mortgage interest rates also continue to help make homeownership more affordable. According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16% in the third quarter from a record low 5.03% in the second quarter, but was dramatically lower than the 6.32% average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30.”

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Tuesday, 14 July 2020

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