NAR Reports Increased Home Sales, but Prices Drop

Accordingrnto the National Association of Realtors® (NAR) home sales rose in every state duringrnthe third quarter compared to the same period one year earlier but pricesrncontinued to decline.   The median price of a single family homerndeclined from the third quarter of 2010 in 111 of the 150 metropolitanrnstatistical areas (MSAs) tracked by the Association and rose in 39.  In the second quarter 41 MSAs had annualrnprice gains. </p

Lawrence Yun, NARrnchief economist said that the market is holding fairly even.  “Homernsales need to recover first – only then can prices stabilize. rnExisting-home sales are little changed from the second quarter but are notablyrnhigher than a year ago,” he said.  “The good news is inventory levels havernbeen trending gradually down.”</p

Home sales which include single familyrnresidences, condominiums, and cooperative apartments, were down nationwide byrn0.1 percent to a seasonally adjusted annual rate of 4.880 million unitsrncompared to 4.883 million in the second quarter but this was 17 percent abovernthe 4.170 million pace recorded during the third quarter of 2010.   That quarter, it should be noted, began justrnas the popular homebuyer tax credits expired. </p

Every state posted arngain but in 45 states (including the District of Columbia) those increased sales overrna year ago were in double digit territory. rnThe greatest increases were in North Dakota (+39.1 percent), Utah (+38.2rnpercent), and Nebraska (36.1 percent).  Onrna regional basis, sales in the Midwest were up 25.1 percent, 16.7 percent inrnthe West, 15.5 percent in the South, and 11.6 percent in the Northeast.</p

Median pricesrnnationally declined 4.7 percent from 177,800 in the third quarter of 2010 torn$169,500 in the most recent period. rnDistressed homes accounted for 30 percent of home sales compared to 33rnpercent in the second quarter and typically sold at a discount of about 20rnpercent.</p

NAR noted that median prices are a reflection ofrnthe types of homes that are selling and can be misleading at times because thernlevel of foreclosures can vary notably in given markets.  Annual pricernmeasures generally smooth out any quarterly swings.</p

Metropolitan area median condominium andrncooperative prices were $167,600 in the third quarter, down 2.2 percent fromrnthe third quarter of 2010.  Twelve metros of the 54 MSAs tracked by NARrnshowed increases in the median condo price, the remaining 42 declined.</p

The median existing single-family home price inrnthe Northeast fell 6.5 percent from the third quarter of 2010 to $236,700.  In the Midwest and the South median prices declinedrn2.2 percent to $142,300 and $153,200 respectively.   The median existing single-family home pricernin the West dropped 9.0 percent to $205,700 in the third quarter from the samernquarter of 2010.  “Western home sales are dominated by cash investors inrnthe lower price ranges,” Yun explained.</p

NAR’s HousingrnAffordability Index which measures the relationship between median home price,rnmedian family income, and mortgages interest rates stood at 183.8 in thernthird quarter, the second highest on record behind the first quarter ofrn2011.  The higher the index, the greater the household purchasingrnpower.  </p

Twenty-nine percent of home purchases during thernquarter were all cash compared to 30 percent in the second quarter and 29rnpercent one year earlier.  Investors, whornmake up the bulk of cash purchasers, accounted for 20 percent of transactionsrnin the third quarter compared to 19 percent in both the second quarter and arnyear ago.</p

First-time buyers purchased 32 percent of homes,rndown from 35 percent in the second quarter and 34 percent in the third quarterrnof 2010.  Historically, entry-level buyers are responsible for about 40rnpercent of home purchases.  </p

NAR President Ron Phipps said home sales shouldrnbe notably higher given the buying power in today’s market.  “Housingrnaffordability conditions have been at a record high this year, rents are risingrnand homes are selling for less than the cost of construction in most of therncountry.  For people with secure jobs,rngood credit and long-term plans, today’s conditions will be remembered as arngolden opportunity to enter the housing market.”

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