Home Sales Post First Increase in Four Months

By:
Peter King | April 22, 2010

Existing home sales posted a strong increase in March, rising a seasonally adjusted 6.8 percent as home buyers moved to take advantage of a soon-to-expire federal tax credit. 

It was the first monthly increase posted since November, when sales also rose in anticipation of the scheduled end of the tax credit, which was subsequently extended and expanded by Congress.
 
The monthly survey released today by the National Association of Realtors (NAR) showed that sales of previously owned homes rose to an annual rate of 5.35 million in March, up from 5.01 million in February. The figure represents a 16.1 percent annual gain over the 4.61 million rate posted in March 2009.
 

Signs of a broad recovery

 
The current data shows a broad-based recovery in housing prices, according to Edward Yun, chief economist for NAR. Sales were up almost uniformly in all four major regions of the country, with monthly increases ranging from 6.0 to 7.2 percent in the Northeast, Midwest, South and West, an unusual level of consistency.
 
“Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” Yun said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices.”
 
All four regions of the nation have also shown marked improvement on an annual basis, with the Northeast showing the strongest annual gains. Existing home sales in the Northeast were up 25.4 percent compared to March 2009, while the annual gains for the other three regions were tightly clustered from 13.9 percent to 15.5 percent.
 
The number of homes available for sale increased 1.5 percent in March to 3.58 million. However, the increasing sales rate meant the housing inventory actually declined slightly to an 8.0 month supply, down from 8.5 months in February.
 

Foreclosures selling steadily

 
“Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably,” Yun said. “In fact, foreclosures are selling quickly, especially in the lower price ranges that are attractive to first-time home buyers.”
 
The housing supply is linked to housing prices and the median U.S. sales price rose to $170,700, up from $164,600 the year before. Nationally, median prices are at nearly the same level as they were one year ago, reflecting a 0.4 percent gain from March 2009.  Median prices ranged from $249,800 in the Northeast to $139,300 in the Midwest.
 
The Northeast showed the strongest annual price gains, increasing 8.9 percent from March 2009, while the West was the only region to post an annual decline, with prices falling 7.9 percent from last year. Prices were up 5.2 percent in the South and remained relatively flat in the Midwest, which posted a 0.2 percent gain from last year.
 
Distressed homes, including foreclosures and short sales, accounted for 35 percent of all home sales, unchanged from the month before. The NAR estimates that distressed homes typically sell at a 15 percent discount to conventional sales.
 
Home buyers have until April 30 to finalize sales offers to qualify for the federal tax credit, which is up to $8,000 for first-time buyers and $6,500 for repeat buyers. Buyers have until June 30 to secure financing and finalize their purchase.

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