The housing market opened an early Christmas present Tuesday as data showed that existing-home sales jumped 7.4% on a monthly basis in November, according to the National Association of Realtors (NAR).
Those figures add up to a seasonally adjusted annual pace of 6.54 million, which is 44.1% higher the same month last year and offered hope that the housing market has finally found its footing.
“While we believe some of the strength in existing home sales continues to be helped by the last effects of the then soon-to-be-expiring tax credit at the end of November (which has since been extended to June 30, 2010), at the same time, we continue to believe the housing market has solidly moved past its trough in [the first half of 2009],” Michael Rehaut, an analyst with JP Morgan, wrote in a research note.
The supply of existing homes also dipped last month to 3.52 million, which translates into 6.5 months of existing homes for sale at the present sales pace.
“Inventories have steadily declined and are closer to balanced levels, which indicate home prices in many areas are either stabilizing or could soon stabilize and return to normal appreciation patterns,” said NAR President Vicki Cox Golder, who is the owner of Vicki L. Cox & Associates in Tucson, Ariz. “This means buyers still have good choices but are purchasing near the bottom of the price cycle with historically low mortgage interest rates. Throw a tax credit on top, and it really doesn’t get any better for buyers with secure jobs and long-term ownership plans.”
Who are these purchasers? Many are first-time buyers, who represented 51% of sales in November, according to the NAR.
Foreclosures continue to be a force in this market: NAR data indicates that 33% of November’s existing home sales were distressed properties. This affected pricing as well, pushing the national median existing-home price down 4.3% on an annual basis to $172,600 last month.
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: Tucson, AZ.