Existing home sales in October surged 10.1% as the first-time home buyer credit continues to drive sales, the National Association of Realtors (NAR) reported today.
Existing homes sales last month were at a seasonally-adjusted annual rate of 6.10 million units, which includes single-family homes, townhomes, condos, and co-ops. The October pace of sales activity was 23.5% higher than they were a year ago, and is the highest it’s been since February 2007.
Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”
The recently extended and expanded tax credit now gives buyers until April 30, 2010 to have a purchase contract place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through – there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.
Mortgage interest rates remain historically low and continue to make purchasing a home the most affordable it’s been in years – boosting the market, the NAR says. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95% in October from 5.06% in September. The average rate a year ago was 6.2%. Last week, Freddie Mac reported the 30-year rate dropped to 4.83%.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington, D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said. “In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive.”
The NAR said total unsold inventory is 14.9% below a year ago. In October there is a seven-month supply of homes on the market at the current sales pace, down from an eight-month supply of inventory in September. Housing inventory hasn’t been this low since it was also at a seven-month supply in February 2007.
The national median home price in October was $173,100. This is 7.1% lower than they were a year ago, but the high percentage – 30% – of distress sales continue to put downward pressure on the median price.
Regionally, the median home price in the Northeast was $235,400, down by 2.6% from October 2008. Last month’s existing-home sales rose 11.6% to a pace of 1.06 million, a level 27.7% higher than a year ago.
In the Midwest, the median home price was $146,600 for a 1.1% gain from October 2008. Sales shot up 14.4% to an annual rate of 1.43 million units and are 28.8% higher than a year ago.
The median home price in the South for October 2008 was $151,100 after losing 6.3% from a year ago. The rate of sales rose 12.7% to a pace of 2.3 million units per year and are 25.7% higher than a year ago.
The median home price in the West was $220,200, 14.7% lower than it was a year ago. The annual pace of sales increased 1.6% to 1.31 million homes and sits 12% higher than in October 2008.
Source:
National Association of Realtors
