Happy-Sad News: Foreclosure Sales Climb 6 comments
Tim Iacono
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The National Association of Realtors (NAR) reported sharply higher existing home sales in September -- however, with foreclosures and short sales accounting for an estimated 35 to 40 percent of all sales, a real rebound in the nation's housing market is still far off.
Sales of existing homes rose 5.5 percent, from a seasonally adjusted annualized rate of 4.91 million units in August to 5.18 million in September, and have risen 1.4 percent on a year-over-year basis marking the first annual increase since late-2005.
As shown above, inventory is still at historically high levels. Though down slightly from last month, supply remains about double normal levels and, while sales may continue to improve as more excess inventory is liquidated, prices will also continue to fall until supply and demand are brought back into balance.
With the number foreclosures still mounting, this will take a while.
The median price for all existing homes sold last month fell 9.0 percent from year ago levels, from $210,500 to $191,600, and further price reductions are expected in the year ahead. As the economy weakens further and credit continues to tighten, home price declines could accelerate.
The market is doing what markets are supposed to do: price discovery.
Interestingly, NAR chief economist Lawrence Yun noted, "The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms."
It's nice to see that home buyers who have waited patiently over the last five years are finally beginning to see housing become more affordable, though, in many areas, there is room for prices to move down much further.
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This article has 6 comments:
They never include the % of sales that are foreclosures. His statement about 80% of purchases being primary residences doesn't mean much. Obviously there's less speculation with tanking prices. I'm curious what the overall % of these sales were in foreclosure.
A few saavy buyers waited for prices to drop before buying, but I think it'll be a brief boost. There are only so many people who can actually afford a home in the U.S., and we're still way overbought.
At least the stock brokers keep their message logically consistent (even if it's historically misleading): "Buy buy buy, stocks always go up long term."
Anyway, the other issue with home prices stabilizing is the overhead supply. How many people are waiting for prices to go up so they can sell? Quite a few. Which means, prices won't go up again for a while. And all those sitting on a 33% loss now need a 50% gain just to get even.