Existing Home Sales Rise

Sales of existing homes posted a modest gain in the second quarter of 2009, rising 3.8 percent to an annual rate of 4.76 million units, according to figures released today by the National Association of Realtors.

The increase follows two consecutive quarters of declining sales, and reflects a 2.9 percent decline from one year ago. The survey covers sales of existing single-family homes, condos and co-ops.

"With low interest rates, lower home prices and a first-time buyer tax credit, we've been seeing healthy increases in home sales, which are a hopeful sign for the economy," said Lawrence Yun, NAR chief economist. "There have been sustained sales gains in Arizona, Nevada and Florida, as well as diverse areas such as Maryland, the District of Columbia and Nebraska."

Biggest increase in Northeast

The Northeast posted the strongest quarterly gains of the four major U.S. regions, posting a 15 percent increase in sales over the first quarter. The West was the only region to post a quarterly decline, down 2.3 percent from the first three months of the year but is also the only region to post an annual gain, up 11.8 percent from the second quarter of 2008.

The Midwest and South posted quarterly increases of 3.2 and 3.9 percent respectively, against annual declines of 5.3 and 7.2 percent. Existing home sales in the Northeast were down 8.4 percent from one year ago. All figures are based on seasonally adjusted annual rates.

Sales remain well below their pace of three years ago, down more than 25 percent from the 6.48 million annual rate recorded in 2006.

Prices gain as well

Median sales prices for single-family homes showed a small gain after three quarters of declines, increasing to an unadjusted $174,100, up from $167,300 the previous quarter. For the year, median prices are down 15.6 percent from their $206,400 level in the second quarter of 2008. Many experts believe prices will once again decline later this year as an expected surge in foreclosures due to rising unemployment works its way through the housing market.

Distressed sales - foreclosures and short sales - accounted for 36 percent of all existing home sales in the second quarter, according to the NAR. The organization said such properties typically sell at a 15-20 percent discount compared to other properties, helping drag median sales prices down.

First-time buyers accounted for one-third of all sales, the NAR said, drawn in part by an $8,000 federal tax credit for persons buying their first home. The tax credit expires on Nov. 30, but many expect that Congress will extend the popular credit to help maintain momentum toward a recovery in the housing market and overall economy.