The fiscal cliff is still more than a month away and that appears to be enough of a buffer to keep the U.S. real estate market recovery on track. The National Association of Realtors (NAR) reports that home prices and sales were up in October despite complications caused by Hurricane Sandy. NAR analysts say prices are up 11.1% over a year ago ending in October and sales have improved 2.1% over the same period. The gains have already improved home equity by billions, and experts say the current low prices and rates won’t last forever. For more on this continue reading the following article from Property Wire.
Sales of existing homes in the US increased in October, even with some regional impact from Hurricane Sandy, while home prices continued to rise due to lower levels of inventory supply.
According to the latest monthly report from the National Association of Realtors, sales rose 2.1% to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September, and are 10.9% above the 4.32 million-unit level in October 2011.
However, there was some impact from Hurricane Sandy according to Lawrence Yun , NAR chief economist. ‘Home sales continue to trend up and most October transactions were completed by the time the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country,’ he explained.
‘We expect an impact on North eastern home sales in the coming months from a pause and delays in storm impacted regions,’ he added.
The national median existing home price for all housing types was $178,600 in October, which is 11.1% above a year ago. This marks eight consecutive monthly year on year increases, which last occurred from October 2005 to May 2006.
‘Rising home prices have already resulted in a $760 billion growth in home equity during the past year. Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year,’ said Yun.
Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 24% of October sales of which 12% were foreclosures and 12% were short sales. These figures were unchanged from September.
Foreclosures sold for an average discount of 20% below market value in October, while short sales were discounted by 14%.
Total housing inventory at the end of October fell 1.4% to 2.14 million existing homes available for sale, which represents a 5.4 month supply at the current sales pace, down from 5.6 months in September, and is the lowest housing supply since February of 2006 when it was 5.2 months. Listed inventory is 21.9% below a year ago when there was a 7.6 month supply.
‘Even with rising home prices, we'll continue to see favourable housing affordability conditions over the coming year, but they won't last forever,’ said NAR president Gary Thomas.
‘Inflationary pressures are expected to build during the next two years. As a result, mortgage interest rates will also rise with inflation. Buyers who are currently held back by tight mortgage credit standards should work to improve their credit scores so they'll be able to qualify for a mortgage while conditions are still favourable,’ he pointed out.
The median time for a property to be on the market was 71 days in October, little changed from 70 days in September, but down 26% from the 96 days recorded in October 2011. Some 32% of homes sold in October were on the market for less than a month, while 20% were on the market for six months or longer.
First time buyers accounted for 31% of purchases in October, compared with 32% in September and 34% in October 2011.
All cash sales accounted for 29% of transactions in October, up slightly from 28% in September and the same as October 2011. Investors, who account for most cash sales, purchased 20% of homes in October, up from 18% in September and 18% in October 2011.
Single family home sales rose 1.9% to a seasonally adjusted annual rate of 4.22 million in October from 4.14 million in September, and are 9.6% above the 3.85 million unit pace in October 2011. The median existing single family home price was $178,700 in October, which is 10.9% higher than a year ago.
Existing condominium and co-op sales rose 3.6% to a seasonally adjusted annual rate of 570,000 in October from 550,000 in September, and are 21.3% above the 470,000 unit level a year ago. The median existing condo price was $177,500 in October, up 11.7% from October 2011.
Regionally, existing home sales in the North east fell 1.7% to an annual pace of 580,000 in October but are 13.7% above October 2011. The median price in the North east was $232,600, which is 4.6% above a year ago.
Existing home sales in the Mid west rose 1.8% in October to a level of 1.11 million and are 18.1% above a year ago. The median price in the Midwest was $145,600, up 10.6% from October 2011.
In the South, existing home sales increased 2.1% to an annual pace of 1.92 million in October and are 11% higher than October 2011. The median price in the South was $152,200, which is 8.2% above a year ago.
Existing home sales in the West rose 4.4% to an annual level of 1.18 million in October and are 3.5% above a year ago. With much tighter inventory conditions, the median price in the West was $242,100, up 21.2% from October 2011.
This article was republished with permission from Property Wire.