Home Sales Rise as Affordability Improves

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac," Yun says. "Inventory remains high, and price declines are pressuring owners."

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

"Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

- Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

- National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500.

“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," Yun says. "These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

- Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

- Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here's a breakdown across the country of existing-home in September:

- West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

- Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

- South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

- Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: National Association of Realtors

Enduring Home Design Trends

Katherine Salant, nationally syndicated columnist and author of The Brand-New House Book, says houses designed with both a master and second bedroom on the first floor have become the most popular because they appeal to all age groups.

Young couples use the second bedroom as a nursery. Middle-age couples use it to keep aging parents close by, and older couples like the design because their differing sleep patterns make sharing a bedroom difficult, Salant says.

Here are other trends Salant points to:

1. The newest variation on the home office is a completely separate office space, connected to the house by a hallway or a breezeway.

2. Kitchens are getting smaller, but they are connected to much larger dining areas, often with a center island where family members can sit while they have an informal meal.

3. Oversized family rooms with high ceilings are giving way to smaller, cozier rooms with lower ceilings.

4. Home theaters have lost much appeal because people don't want to watch television in a separate area of the home. TV viewing is a more informal activity that people engage in while they're doing other things like cooking or getting ready for work.

Source: The Washington Post, Katherine Salant (10/18/2008)

Some Housing Markets Still Thriving

Prices are holding up nicely in the ZIP codes of the rich and famous.

Forbes magazine examined the top 100 most expensive ZIP codes in the United States and concluded that most saw strong price appreciation in the last 12 months.

Here are the top-10 most expensive ZIP Codes and the median home sales prices:

1. Fisher Island, Fla., Miami-Dade County, 33109. Median sales price: $3.85 million
2. Alpine, N.J. Bergen County, 07620, $3.59 million
3. Mill Neck, N.Y. Nassau County, 11765, $3 million
4. Newport Coast, Calif., Orange County, 92657, $2.8 million
5. Water Mill, NY, Suffolk County, 11976, $2.72 million
6. Atherton, Calif., San Mateo County, 94027, $2.7 million
7. Santa Barbara, Calif., Santa Barbara County, 93108, $2.7 million
8. Wainscott, N.Y., Suffolk County, 11975, $2.56 million
9. Rancho Sante Fe, Calif., San Diego County, 92067, $2.47 million
10. Beverly Hills, Calif. Los Angeles County, 90210, $2.41 million

Source: Forbes, Matt Woolsey (10/07/08)