Existing Home Sales Rise – Again

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The National Association of REALTORS® (NAR) reported on Thursday of this past week that existing home sales for the month of June increased for the third month in a row fueling speculation that the housing downturn is starting to reverse direction.  Excerpts of NAR’s press release¹ follow:

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.90 million-unit level in June 2008.

Lawrence Yun, NAR chief economist, is hopeful about the gain.  “The increase in existing-home sales occurred in all major regions of the country,” he said.  “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions . . . “

Much of the fuel for the fire of homes sales has occurred in the first-time homebuyer market which has accounted for 29 percent of transactions according to an NAR survey of its practitioners.  With the $8,000 tax credit deadline of December 1, 2009 (4½ months away) fast approaching, it will be interesting to see if this segment continues to stoke sales numbers.

Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May.  Raw inventory totals are 14.9 percent below a year ago.

“This is another hopeful sign – if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun said.

Mirroring Dr. Yun’s comments, it’s great news that inventory levels are waning nationally.  Our local inventory levels reflect a much healthier picture.  According to the latest numbers in the Lancaster marketplace, we are at a 7.2 month inventory supply level.  Most economists say that a six month inventory supply is considered a balanced market.  This is just one more example of the old adage, “All real estate is local.”

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities.  “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” he said.  “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date.  As a consequence, consumers need the expertise of REALTORS® more than ever to navigate both the obstacles and opportunities in today’s market.”

Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago.

Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May.

As we enter the second half of 2009, the national and local real estate markets are showing signs of renewed vitality which should set us up for a healthy 2010.  Stay tuned.

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¹ Molony, Walter. “Existing-Home Sales Up Again.” Realtor.org. National Association of REALTORS, 23 July 2009. Web. 25 July 2009. <http://www.realtor.org>.

Related articles of interest:

• Home sales in the US rise again (news.bbc.co.uk)
• U.S. existing home sales rise sharply (thestar.com)
• Housing Sector ‘No Longer in Freefall’: 5 Things You Need to Know (usnews.com)