In a welcome bit of good news for the housing market and economy, sales of existing homes rose 5.5 percent in September, achieving a seasonally adjusted annual pace of 5.18 million units. For a change, those numbers also show a year-over-year gain, with an increase of 1.4 percent.
The National Association of Realtors (NAR), which releases these monthly numbers, credited the uptick to bargain prices on homes and low interest rates on mortgages. “This is the first time since November 2005 that home sales have been above year-ago levels,” said NAR President Richard F. Gaylord, who is a broker in Long Beach, Calif. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”
Plummeting home prices are making homes more attractively priced. According to NAR, the national median sales price for an existing home in September was $191,600, which is 9 percent lower than it was one year ago at the same time.
Others sounded less sanguine about today’s data. “On the surface, this appears to be a good report. Sales were up and inventories down. But if one considers that distressed sales (foreclosures and short sales) are driving the sales numbers in the West, and to a certain extent in the other three regions, the rebound raises questions about whether it is sustainable,” wrote Patrick Newport, U.S. economist with IHS Global Insight in Lexington, Mass. “Our view is that it is not sustainable. Distressed sales will remain a factor over the next few months. However, a tight labor market, tight credit, and wide mortgage spreads should dampen demand enough to depress sales going forward.”
The West did see a significant spike in September, with sales skyrocketing 16.8 percent, far beyond anywhere else in the country.
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: Los Angeles, CA.