Wednesday, August 12 2009
Existing-home sales in the second quarter showed healthy gains from the first quarter in the vast majority of states, and price declines have increased affordability in most metro areas, according to the latest survey by the National Association of REALTORS®.
Total state existing-home sales, including single-family and condo properties, rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million units in the second quarter from 4.58 million units in the first quarter, but remain 2.9 percent below the 4.90 million-unit pace in the second quarter of 2008.
Thirty-nine states experienced sales increases from the first quarter, and nine states were higher than a year ago; the District of Columbia showed both quarterly and annual rises.
Gain Appears to Be Sustainable
“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. More recently, we’ve seen strong double-digit gains in Idaho, Utah, New Mexico, Washington, Hawaii, New York, New Jersey, Maine, Vermont, Wisconsin, Indiana, South Dakota, and Montana.”
Yun also explained housing’s impact on the overall economy. “Given the need for related goods and services, each home sale pumps an additional $63,000 into the economy – that’s how the housing engine traditionally pulls us out of recession. In addition, sales are drawing down inventory and that will help stabilize home values, which in turn will lessen foreclosure pressure and boost credit availability for other sectors of the economy.”
During the second quarter, 129 out of 155 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the second quarter of 2008, while 26 areas had price gains.
Distressed sales – foreclosures and short sales – accounted for 36 percent of transactions in the second quarter, which continued to weigh down median home prices because they typically are sold at a 15 to 20 percent discount; first-time buyers accounted for one-third of transactions. The national median existing single-family price was $174,100, which is 15.6 percent below the second quarter of 2008.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage declined to a record low 5.03 percent in the second quarter from 5.06 percent in the first quarter; the rate was 6.09 percent in the second quarter of 2008.
NAR President Charles McMillan said there are unique opportunities in the current market. “Housing affordability is hovering near record highs and there’s a wide selection of homes, but first-time buyers need to move quickly to take advantage of the $8,000 tax credit because they have to finalize the transaction by November 30,” he said. “Various state, local, and nonprofit programs target first-time buyers, and a REALTOR® can help you identify the programs and financing options that are currently available in your area.”
The largest sales gain between the first and second quarters were in:
Twelve other states experienced double-digit sales increases from the first quarter. Year over year, California, Minnesota, and Michigan are showing double-digit gains from the second quarter of 2008 but are off from the first quarter of this year.
The largest single-family home price increase in the second quarter was in the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $113,200 rose 30.6 percent from a year ago. Next was the Cumberland area of Maryland and West Virginia at $123,500, up 21.7 percent from the second quarter of 2008, followed by Elmira, N.Y., where the median price increased 11.3 percent to $85,000.
Price Gains and Declines
“The sharpest price declines continue to be concentrated in metros with high levels of foreclosures, including areas in California, Florida, Arizona, and Nevada, where distressed homes comprise many of the transactions,” Yun said.
Median second-quarter metro area single-family home prices ranged from a very affordable $55,700 in the Saginaw-Saginaw Township North area of Michigan to $569,500 in Honolulu. The second most expensive area in the second quarter was the San Jose-Sunnyvale-Santa Clara area of California, at $500,000, followed by San Francisco-Oakland-Fremont at $472,900.
Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $71,500, and Lansing-East Lansing, Mich., at $81,200.
“Recently sold homes are concentrated in lower price ranges. The median price may not be representative of overall values in a given area because many middle-priced homes are not on the market,” Yun clarified.
In the condo sector, metro-area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $176,900 in the second quarter, down 19.8 percent from the second quarter of 2008. Four metros showed annual increases in the median condo price and 53 areas had declines.
The metros with condo price increases were:
Source: NAR http://www.realtor.org/RMODaily.nsf/pages/News2009081201?OpenDocument