The existing-home market dusted itself off in August, rising 7.6% to a seasonally adjusted pace of 4.13 million units, according to data released Thursday by the National Association of Realtors (NAR).
However, that level of activity remains historically low. On a yearly basis, that figure is 19% lower than the same month last year.
Many see that as a sobering reminder that the housing recovery continues to be a slow process, thanks to soft home values, weak job creation, and the ongoing foreclosure crisis, all of which continue to worry consumers. “People understand the good affordability conditions with stable home prices in most areas, but they’re concerned about the economy and speculation on Wall Street,” noted Vicki Cox Golder, NAR’s president and a real estate agent in Tucson, Ariz.
However, “we are not expecting worse sales numbers going forward, just a long climb out of a deep hole,” noted Patrick Newport, U.S. economist with IHS Global Insight in Lexington, Mass., who believes “the path to recovery in housing will be through the labor market. As the economy starts adding jobs … demand for homes will pick up, people will move to live near their new jobs, inventory will start coming down, and builders will ramp up on housing starts. But this will take time. We are not expecting sales to climb above the 6.0 million mark--a number one might expect under normal conditions--until 2013.”
Foreclosures continue to be a factor in the current market. Distressed sales represented 34% of all existing-home sales in August, according to NAR data—that represents a two-percentage-point uptick on a monthly basis.
Pricing remains low, with a median existing-home price of $178,600 in August. For comparison, the median sales price for a new home was $204,000 in July, the most recent data available.
Alison Rice is senior editor, online, at BUILDER magazine.