Existing home sales rebound, surging 9.4 percent in September
Filed under: Economy
The nearly year-long positive trend in the U.S. housing sector continues. Boosted by the $8,000 federal credit for first-time home buyers, U.S. existing home sales surged 9.4 percent in September to a seasonally adjusted annual rate of 5.57 million units, the National Association of Realtors announced Friday. It's the highest level for existing home sales in more than two years.
Economists surveyed by Bloomberg News had expected September existing home sales to total a 5.35-million-unit annualized rate. Existing sales totaled a 5.1 million-unit annual pace in August. Further, existing home sales are also up 24 percent since bottoming in January.
Meanwhile, inventories of existing homes also fell 7.5 percent in September to a 7.8-month supply at the current sales pace, down from a 9.3-month supply in August. Inventories have fallen about 15 percent in the past year. Economists say a healthy, normal existing home sale market has a three- to five-month supply of homes available for sale.
What's boosting home sales? Lawrence Yun, NAR chief economist, said the federal government's $8,000 tax credit for first-time home buyers, which Congress will probably extend past the current program's November 30 deadline, is a factor.
"Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home," Yun said in a statement. "We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery."
In addition, the U.S. median home price for all types of housing fell to $174,900 in September and is down 8.5 percent in the past 12 months; still that's a lower year-over-year price decline than the 15.1 percent decline recorded in July. Further, the median sale price for a single-family home fell 8.1 percent to $174,900; for condos, the median price declined 11.7 percent to $175,100.
Economists and market analysts closely follow the monthly existing home sales statistic because previously owned homes account for the bulk of U.S. home sales. Moreover, housing activity does not operate in a vacuum. When homes are sold, homeowners tend to buy durable goods and big ticket items for their new homes: furniture, appliances, home care supplies, and landscaping equipment. For example, driveway sealant sales rise in the spring after existing home sales rise. The reason? Home buyers spruce up their existing home by re-sealing or re-surfacing the driveway. An uptrend in any of these areas is good news for the economy and bullish for U.S. stock markets.
By region, in September existing home sales increased 4.4 percent in the Northeast, where the median price fell 7.0 percent to $234,700 compared to a year ago; sales rose 9.6 percent in the Midwest, where the median price dipped one percent to $147,600; in the South, sales rose nine percent, with the median price dropping 7.6 percent to $153,500; in the West, sales surged 13 percent, with the median price plunging 15 percent to $219,000.
Analysis: Clearly the $8,000 tax credit is boosting sales, but so is the price mechanism. Prices have fallen to such a degree, by more than 40 percent in some metropolitan areas, that those potential home buyers with high credit scores and an adequate down payment have looked at prices and the relatively low mortgage rates, and concluded that now is a pretty good time to buy.
Further, if existing home sales continue to trend higher -- they've risen for basically a year -- housing will begin contributing to U.S. GDP at some point in 2010, after more than two years of subtracting from it. Moreover, as economists frequently note, housing affects many lateral sectors and stimulates economic behavior in subtle ways. Also encouraging in the September data is the large, 7.5 percent drop in home inventories. That fast pace probably will not continue in the months ahead, but will help to stabilize housing prices by decreasing the large supply of excess inventory built up during the leveraging bubble.
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Reader Comments (Page 1 of 2)
10-23-2009 @ 11:44AM
07 Shelby said...
Sales might be going up but they are mostly foreclosure homes. Also notice that the prices are dropping, proving once again, this represents foreclosure sales rather than real resale sales. Just proves properties are being sold at fire sale prices which isn't good. Further depreciation of sales prices are not good for homeowners and will make more people turn their house back to the bank because they owe much more than what the property is worth. This is not good news and a reflection of the economic situation in this country no matter how nice they want to spin the data! They should have separate figures for short sales and foreclosures from actual sales and you would see very few homes are being sold by actual owners!
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10-23-2009 @ 12:10PM
JUSTIN said...
WELL SAID 07 SHELBY
10-23-2009 @ 1:36PM
USAcitzn said...
It's a buyer's market right now, if you have a good job and can secure a loan. More people would like to upgrade but they can't sell their current home. First time buyers are getting some great bargains, many due to someone else's unfortunate situation. We need to get American jobs back to make America strong again. One way is participating in The People's Financial Stimulus Plan ... on a private website ... www . peoplesstimulusplan . weebly .com It's for Americans and by Americans ! We all need to pitch in and unite to make things better in America.
10-23-2009 @ 11:44AM
yokoach said...
uh oh....this is bad news for Obama haters....a plan by his administration has existing home sales higher than they've been in 2 years....that means, that even before Obama they were sucking and now they're better....yup, Hannity, O'Reilly, Beck and Rush must all be right....he doesn't know what he's doing, that's why things are turning around....I guess Rush's way is better....than He hopes Obama fails as a president, which means that if Obama fails, we'd have higher gas, more people out of work and out of their homes in the next 3 years, more uneducated kids, more people without healthcare, and a worse situation in the world economically, politically and militarily....just so Rush could be right about what Rush thinks should be done...Rush would have the whole country go farther down the tubes so he could say "see I told you so"....What kind of patriot wants our country to fail just so they can justify THEIR choice for president....
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10-23-2009 @ 5:26PM
Paul said...
Many realestate forcasts are that the realestate market will continue to contract for the next 4 years. 11% depreciation is expected in 2010 & will continue at least thru 2014. Agents in my area tell me most sales are shorts & distress sales,.. no big market turnaround here no matter what the spin on the sales figures indicate. The barn is on fire folks & the winds are kicking up.
10-23-2009 @ 11:56AM
dano said...
And prices keep falling. Your dollar is worthless. Obviously a 2 year old wrote this article. We are at 10% unemployment, and it is still rising. Go suck an egg.
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10-23-2009 @ 11:57AM
Don said...
Surge !!! ???? How ridiculous !!! It's just like the stock market when you are down 50% and need 100% to recover
or in more relative terms, just like the market up 60% from march but still down 40% overall. Let's get the real info not sugar coated BS !!!
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10-23-2009 @ 12:09PM
Paul said...
Homes are still over priced, we are heading into inflation when the smoke clears, right now! food prices are going up, wages are going down, when they talk about jobs, they forget about those who are not collecting unemployment because their benefit ran out, we still live in a greedy world, people who have the money are buying up most of the foreclosures and charging high rent, this keeps the first time home buyers out of the market, best thing for the smart investor is to wait until the housng market bottoms out, it still has a long way to go.........................
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10-23-2009 @ 12:32PM
red white & YOU said...
Heading into inflation??? What planet have YOU been on? We have had inflation for years..We just norrowly escaped a great depression,,Inflation?? The housing market is going to bottom ou?, More like CORRECT itself. Do YOU really think the inflated home prices of a few yrs back was the NORM? The housing market can be compared to a rubber band, you can only stretch it so far, then it HAS to contract. As far as charging high rent, investors don't dictate rent, the market dictates the gowing price. All those so called sellers who thought they owned the Taj Majal are realizing now home prices are where they should be.. If you are a buyer what better time then now to buy? Lower prices, lower interest rates. Thats kinda like the perfect storm in the real estate market..If you bought your home a few yrs ago and want to sell now, OH WELL, its called bitting the bullet..Right NOW if YOU could buy a foreclosed home and sell it for a profit, you would and should. Thats not being greedy, thats SMART..
10-23-2009 @ 12:42PM
lawdog said...
All great comments. We can expect a minimum 10% additional decrease in home values by next summer. That will put me at a break even mark with the Bank, assuming a 30% total loss of value. That is conservative folks. So what do we do? At the point where the value is less than the balance, and no hope in sight for a recovery, millions of people will bail on their homes. The payment simply becomes rent. The nest eggs will have been eaten by the vultures. Yet the government continues to bail out the big companies. What a (once) great country!! lol
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10-23-2009 @ 9:19PM
A Lee said...
Obama has really done a good job so far for some poeple in destess with their homes for now but what about the people who has lost their homes before he got into office? These people were tax payers too. There are no program developed to help give them a chance to get back into a home. Due to credit problems they are the lost tax payers of america. They can only sit back and watch their tax dollars go to work for the very people who started this mess. The housing market would bounce back really quick if we had in place some kind of credit forgiveness for those forks but with conditions. Example: They would have to be able to afford the home and all outstanding debt would have to be taken care of the process.
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10-23-2009 @ 2:40PM
07 Shelby said...
Those great programs you speak about are only a suggestion from the gov in reality. Banks don't have to give/reduce interest rates if they don't want to. These programs are voluntary compliance only. If the gov wanted 9 million people to take advantage of this gov relief program, they would make it mandatory for banks to reduce the interest rates of everyone that applied. Until then, there will be very few people using the MHM program the gov loves to talk about. Every mortgage broker I have spoken with tell me the same thing, banks aren't doing these deals in any significant amounts and all that they do are people with steady income but can't make their payments due to mortgages re-setting at higher rates. The banks rather take the homes and sit on them hoping to make huge profits when the markets turn around again. This is the biggest land grab in history and our tax dollars are paying these banks to do it!
10-23-2009 @ 12:49PM
mroneoftheguys said...
Values of our homes and condos continue to free fall...down now more than 33 %....While the taxes for said homes and condos go up here in Arizona....Fed tax to pay for the Gov. giveaways next yr hang heavy over our heads and our reps. in Gov. continue on their welfare handouts with money they don't have....Our neighborhoods full of foreclosed homes owned by the banks with forcloseure higher now then ever in our state history.....things are getting better this last yr???....only a Dem-0-crap would think so.................
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10-23-2009 @ 1:04PM
Donovan said...
Every time the stock market starts to drop, Home sales go up, unemployment goes down. And in 24 hours, everything commin up roses. This is such a crock of BS.
I'd for one would like to know where some of the article writers come up with their information. Are these writers recently fired from the National Inquire?
And if anything, home sales would be down in the month of September. Especially with children getting ready to go back to school.
These writers really need to distinguish facts from fiction. Their as bad, if not worse then the economist speculating with their crystal ball.
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10-23-2009 @ 2:17PM
Donovan said...
Foreclosures and homes with a listing price between $250,000 & $325,00 are selling. However, foreclosures are the majority of homes going under contract.
Actually even short sales have dropped. As buyers do not care to deal with both the seller and the bank. Short sales are a pain the a$$. And the bank can hold out on accepting, and agreeing on an offer for as long as they want. A short sale is nothing more then a long drawn out bank auction process of a property. And very frustrating for buyers.
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10-23-2009 @ 1:40PM
Save America said...
Come on people, the home sales are up because people with jobs are taking advantage of the $8,000 first time home buyer deal. Unless these buyers are guarenteed jobs, who knows, they may lose their home to forclosure, too.
The only jobs materializing are part time and one will lose their unemployment benefit if they report they are working until they become unemployed again.
This is just another ploy of our government to socialize this country. You people who believe our recession is over really give our government feedback about how stupid most americans are.
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10-23-2009 @ 2:02PM
desertlady said...
I don't buy this bull. Besides it sure don't help the the unenployed like where are all the jobs we in this country were suppose to be. What a laugh this president is.
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10-23-2009 @ 2:04PM
George said...
Prices have fallen to such a degree, by more than 40 percent in some metropolitan areas, that those potential home buyers with high credit scores and an adequate down payment have looked at prices and the relatively low mortgage rates, and concluded that now is a pretty good time to buy.
THERE YOU HAVE IT, FOLKS, MAYBE SANITY HAS RETURNED........
Remember, the basis of the 2005-2007 problem....... buyers taking on more debt than they could afford.
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10-23-2009 @ 3:09PM
clem said...
Remember, the basis of the 2005-2007 problem....... buyers being fooled by low life realtors and bankers into taking on more debt than they could afford. "don't worry I will flip this over priced house in a year or two we will make big bucks" lets hope that we can regulate the industry both civil and criminal, most if not all I have ran across need to spend some time behind bars
10-23-2009 @ 2:17PM
Dave Fisher said...
What a "spin job" on the fact that the banks are dumping repos and hoarding cash to make quick jumps in and out of the stock market to pump balance sheets and show they are "profitable". How many of these "existing homes" will be owner occupied? How many bank employees are now in the landlord business? A real "positive trend".
VOTE THEM ALL OUT!
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