By Mark Huffman
ConsumerAffairs.com
August 21, 2009
On the surface, it appears as good news for the housing market and
the economy. For the first time in five years, existing-home sales
have increased for four months in a row in July, according to the
National Association of Realtors.
But air continues to flow out of the housing bubble. The NAR report also notes that the median price of a single-family home in July was $178,300, which is 14.6 percent below a year ago. Distressed properties continue to weigh down the median price because they typically sell for 15 to 20 percent less than traditional homes.
And there are still plenty of homes to choose from. Total housing inventory at the end of July rose 7.3 percent to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace. However, those raw inventory totals are 10.6 percent lower than a year ago when the number of unsold homes was at a record.
The increase in transactions provides hope for homeowners who are hoping to sell their homes, but falling prices will likely apply more pressure on those who are trying to fight off foreclosure. An NAR practitioner survey showed first-time buyers purchased 30 percent of homes in July, and that distressed homes accounted for 31 percent of transactions.
Without saying the real estate market has bottomed, NAR chief economist Lawrence Yun says it has definitely turned for the better.
"A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales," he said.
Regionally, existing-home sales in the Northeast surged 13.4 percent to an annual pace of 930,000 in July, and are 3.3 percent higher than July 2008. The median price in the Northeast was $236,700, down 15.0 percent from a year ago, according to the group.
Existing-home sales in the Midwest jumped 10.9 percent in July to a level of 1.22 million and are 8.0 percent above a year ago. The median price in the Midwest was $157,200, which is 5.9 percent less than July 2008.
In the South, existing-home sales rose 7.1 percent to an annual pace of 1.95 million in July and are 5.4 percent higher than July 2008. The median price in the South was $164,500, down 7.1 percent from a year ago.
Existing-home sales in the West slipped 1.7 percent to an annual rate of 1.13 million in July, but are 1.8 percent above a year ago. The median price in the West was $202,300, which is 28.0 percent below July 2008.
