Existing Homes Sales Trend Upward
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- Peter King | September 23, 2010
Existing home sales in August regained some of the ground they lost the previous month, rising 7.6 percent to a seasonally adjusted annual rate of 4.13 million, according to figures released this morning by the National Association of Realtors.
That’s an increase from July’s upwardly adjusted annual rate of 3.84 million units. Existing home sales plunged more than 27 percent in July following the expiration of the federal homebuyer tax credit. August sales showed a 19.0 percent annual decline from the 5.10 million level of August 2009.
“The housing market is trying to recover on its own power without the home buyer tax credit,” said Edward Yun, NAR chief economist. “Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty.”
Prices generally stable
The median sale price for existing homes in August was $178,600, down from $181,200 in July. The decline may be due to an increase in the share of distressed homes, representing 34 percent of all sales in August compared to 32 percent in July.
On an annual basis, prices were up 0.8 percent from August 2009, when the median price was $177,200.
“Home values have shown stabilizing trends over the past year, even as the economy shed millions of jobs, because of the home buyer tax credit stimulus,” said Yun. “Now that the economy is adding some jobs, the housing market needs to steadily improve and eventually stand on its own.”
First-time buyers drying up
The tax credit appears to have encouraged many first-time homebuyers to act sooner than they might have without the credit, so that fewer remain in the market. First-time homebuyers accounted for 31 percent of all existing home sales in August, down from 38 percent in July. Meanwhile, investors accounted for 21 percent of sales, up from 19 percent in July, with the rise neatly matching the 2 percent increase in the share of distressed sales.
The supply of homes for sale fell slightly, by 0.6 percent, to just under 4 million homes. That total is up 1.5 percent from the August 2009 level and nearly matches the average for all of 2007, suggesting that the supply of foreclosed properties coming onto the market remains fairly well regulated, at least for now.
The original deadline for closing homes sales under the federal homebuyer tax credit was June 30. Although that deadline was later extended by Congress, most sales qualifying for the credit were already closed by that date, leading to a sharp decline in closings in July, reflected in the NAR sales figures.
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