Home sales and prices continue to fall
More rates and news from
Yahoo Finance and Realty Times
By Justin Hunter
The real
estate and housing market has continued to show signs of a major
correction since the beginning of 2006. Sales and mortgage
originations began to drop as interest rates continued to rise,
but since the end of June, interest rates have been slowly declining.
Although the median home price in the U.S. continued to rise this
year, it did so at a much, much slower pace than in previous years.
Economists knew it would take time for prices to actually decrease.
Well, the wait is over as the past coupe of months has produced
price declines.
The article, “Existing-home sales, prices slide,” posted
on Inman News October 25, 2006, provides potentially good or bad
news about the current real estate market, depending on whether
you are a buyer or seller.
‘The rate of existing-home sales
fell for the sixth straight month in September and the median existing-home
price dropped 2.2 percent in September compared to September 2005,
the National Association of Realtors (NAR) trade group reported
today.”
The 2.2 percent price decrease may not seem significant but it is
considering the steady rate on inflation and the fact that year-over-year
price declines hadn’t been recorded since 1995 until this
year.
“The seasonally adjusted annual rate of home sales fell to
6.18 million in September, which was 1.9 percent lower than the
August rate and 14.2 percent below the September 2005 rate. The
September 2005 rate was the third-strongest month on record.”
The seasonally adjusted annual rate is a projection of one month’s
sales total throughout a 12-month period, and then is adjusted to
include seasonal fluctuations in sales activity.
“An estimated 3.75 million existing homes were available for
sale at the
end of September, which represents a 7.3-month supply at the current
sales pace. The inventory of existing homes grew 35.1 percent in
September compared to September 2005, while the 7.3-month supply
in September represents a 58.7 percent increase over the September
2005 supply.”
The median existing home price for September 2006 was $220,000,
which is $5,000 less than the $225,000 mark in September 2005.
What is interesting is how home sales and prices stacked up regionally.
Existing home sales actually rose 0.4 percent in the South from
August but recorded a 9.0 percent decline from September 2005. While
the median home price decline 1.6 percent ($184,000) in the South
from last year, according to the NAR report.
“Existing-home sales in the Midwest eased 2.8 percent in September
to a level of 1.39 million, and were 13.7 percent lower than a year
ago. The median price in the Midwest was $169,000, which is 2.3
percent below September 2005.”
Also, according to the NAR report, home sales in the West dropped
3.1 percent to an annual pace of 1.25 million in September and were
23.8 percent lower than September 2005. The median price in the
West was $332,000, which is a 4.3 percent year-over-year decrease.
“Existing-home sales in the Northeast fell 3.7 percent to
a level of 1.03 million in September, and were 13.4 percent below
September 2005. The median existing-home price in the Northeast
was $259,000, down 5.1 percent from a year earlier.”
But the market
may rebound sooner than expected largely due to the strong economy,
lowering home prices and sales increases. Sales are expected to
increase by the beginning of 2007 because of the low asking prices.
“David Lereah, NAR's chief economist, said in a statement,
‘Considering that existing-home sales are based on closed
transactions, this is a lagging indicator and the worst is behind
us as far as a market correction -- this is likely the trough for
sales. When consumers recognize that home sales are stabilizing,
we'll see the buyers who've been on the sidelines get back into
the market, and sales will be at more normal levels in the wake
of the unsustainable boom that we saw last year.’”
