Dennis Norman
By: Dennis Norman
The good news about the real estate market keeps coming! Don’t get too excited yet, I don’t know that the worst of it is over yet, not sure if the “fat lady has sang” yet or not, but at least the reports lately on the market have been encouraging.
According to the latest report released today from the National Association of REALTORS(R), existing-home sales in the second quarter showed healthy gains from the first quarter in the vast majority of states.
Existing home sales (including single-family homes and condos) by state rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million units in the second quarter from a rate of 4.58 million units in the first quarter. While an improvement over first quarter, the second quarter numbers are still 2.9 percent below the 4.90 million-unit pace from the second quarter of last year.
In all, thirty-nine states showed sales increases in the second quarter from first quarter and nine states had higher sales numbers for the quarter than a year ago.
Lawrence Yun, NAR Chief Economist
Lawrence Yun, the chief economist for the National Association of REALTORS(R) said the sales 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,” he said. “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.”
One concern I have, that I think many investors share, is what happens when the tax credits go away at the end of the year? After all, according to NAR’s report, one-third of the sales in the second quarter were to first-time buyers. Since the credits have no doubt played an important part in getting these first-time buyers to buy it will be interesting to see what happens when the credits are gone.
In addition to tax credits, price has definitely played a part in the sales gains. During the second quarter 129 out of 155 (83%) metropolitan areas surveyed reported lower median existingsingle-family home prices in comparison with the second-quarter of 2008 while 26 areas had price gains for the period. The national median price for an existing home was $174,100 which is 15.6 percent below the second quarter of 2008.
Distressed sales – foreclosures and short sales – accounted for 36 percent of transactions in the second quarter, which continued to bring down median home prices because they typically sell at a discount.
The biggest winner in terms of sales for second quarter was the state of Idaho with a 67.5 percent increase from first quarter; followed by Hawaii with an increase of 24.2 percent; New York, up 22.3 percent; Wisconsin with a 21.7 percent increase; and Nebraska at 20.3 percent. There were twelve other states that had double-digit gains for the quarter.
Some metropolitan areas are even seeing increasing home prices. The largest increase was in the Davenport-Moline-Rock Island area of Iowa andIllinois where the median price of $113,200 was a 30.6 percent increase from a year ago. The Cumberlandarea of Maryland and West Virginia with a median home price of $123,500 was up 21.7 percent from a year ago.
The biggest price declines continue to be in those areas with high levels of floreclosures which includes parts of California, Florida, Arizona and Nevada.
One thing to keep in mind with the median home prices are the fact that first time buyers are one third of the market, meaning there are more entry-level sales than may be normal and it may be skewing the data.
To watch Lawrence Yuns video giving his current economic update click the link below:
Lawrence Yun – 2nd Quarter 2009 Economic Update
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