Existing Home Sales Continue to Rise
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- Peter King | December 23, 2009
Existing home sales rose again in November, but prices remained stagnant despite a dwindling inventory of available properties, according to new data from the National Association of Realtors (NAR).
Existing home sales increased by 7.4 percent for the month, to a seasonally adjusted 6.54 million units. The figure represents a 44 percent increase over the 4.54 million-unit rate posted one year ago in November 2008 and exceeds the full-year rate of 6.48 million recorded in 2006, when the real estate market was at its peak.
The NAR attributed the increase to homebuyers trying to complete purchases before the originally scheduled expiration of the first-time homebuyer tax credit on Nov. 30. That credit has been extended to April 30, with a similar credit offered to repeat homebuyers as well. Sales also benefitted from continued low mortgage rates, which were below the 5 percent mark on the benchmark 30-year fixed-rate mortgage for most of the month.
“This clearly is a rush of first-time buyers not wanting to miss out on the tax credit,” said Lawrence Yun, NAR chief economist. He added, “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010.
Over half are first-time buyers
A survey by the NAR showed that first-time buyers accounted for 51 percent of home purchases in November, up a single percentage point from October. The NAR predicts that 4.4 million households will claim the tax credits before they expire.
November’s sales caused the inventory of available homes on the market to 3.52 million, down 1.3 percent from the month before and representing a 6.5 month’s supply. Economists generally consider a six-month supply to represent a healthy balance between supply and demand. By contrast, one year ago the November 2008 inventory represented an 11 month supply.
The November median sales price was $172,600, essentially unchanged from October’s level of $172,200. Median prices have been in a gradual decline the second half of the year, after reaching their 2009 high of $182,000 in June.
By contrast, the median U.S. home price in 2006 at the top of the market was $221,900.
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