Existing-Home Sales Record Big Gains
Existing homes sales were up again with big gains last month fueled by the home buyer tax credit. Existing-home sales showed gains in October and have established a strong upward trend over the past seven months. During this same period inventories nationwide have continued to decline.
Existing-home sales, which include single-family detached, townhouses, and condominiums gained more than 10 percent to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million according to the NAR.
Home Buyer Tax Credit Fuels Surge
“Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer,” said economists with the NAR.
“Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through—there likely are many more buyers who were attempting to purchase but simply ran out of time,” NAR economists said.
Inventory Declines
“In parts of the country, especially in Southwestern states but also in Florida and suburban Washington D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” NAR President Vicki Cox Golder said.
“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a REALTOR® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.
According to the NAR, national total housing inventory at the end of October fell 3.7 percent, which represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.
“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” according to NAR’s economists. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.
This is great news on many fronts! Home sales are up and we are heading back toward a balanced market between Buyers and Sellers!
