Westchester County Home News: NAR Reports Big Rebound in Home Resales

Tuesday, October 27, 2009

NAR Reports Big Rebound in Home Resales

A surprising jump in the number of existing-homes sold in September pushed the monthly tally to its highest level in more than two years, the National Association of Realtors (NAR) reported Friday.

After a disappointing showing in August, sales of previously-owned homes in September marked the fifth monthly gain in the past six months. The trade group said much of the activity was driven by first-time buyers hoping to take advantage of the $8,000 federal tax credit for new purchasers, further stoking the industry’s push for Congress to extend the housing stimulus tax break, which is set to expire in just over a month.

Lawrence Yun, NAR’s chief economist, commented, “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Early information from an annual consumer study to be released next month by NAR shows that first-time home buyers accounted for more than 45 percent of home sales during the past year.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 9.4 percent in September to an annual rate of 5.57 million units, up from a level of 5.10 million units in both the previous month and during September of last year.

Sales activity is at the highest level in over two years, since it hit 5.73 million in July 2007, NAR said, with distressed homes accounting for 29 percent of transactions in September.

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” Yun said.

He added, “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth.”

The national median existing-home price for all housing types was $174,900 in September, NAR said. That figure is 8.5 percent lower than September 2008.

“Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country,” explained NAR President Charles McMillan.

Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, NAR said. September’s sales took a large chunk out of the 9.3-month supply reported in August. Unsold inventory totals are now 15 percent below a year ago, according to NAR.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”