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October 19th, 2012

Home prices rise as sales decline

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homebuyer-sellerHome prices were on the rise again last month, but fewer existing homes were for sale and the number of sales declined modestly, according to the National Association of Realtors.

The national median price of existing homes, townhomes, condominiums and co-ops was $183,900 in September, up 11.3 percent from a year ago. The median price is the point at which half of the properties sold for more and half sold for less.

The September price increase was the seventh consecutive rise in the monthly year-to-year comparison. The last recorded incidence of seven consecutive monthly increases occurred from November 2005 to May 2006, the NAR reported.

Existing-home sales declined 1.7 percent to a seasonally adjusted annualized rate of 4.75 million in September, a slightly slower pace than the 4.83 million rate recorded in August. (The annualized rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months.)

Bank foreclosures and short sales accounted for 24 percent of September sales.

Fewer homes for sale

The supply of homes on the market dropped 3.3 percent from the end of August to 2.32 million at the end of September, representing a 5.9-month supply at the then-current pace of sales. A year earlier, the for-sale inventory would have lasted 8.1 months at the then-current pace of sales. These figures suggest a shift in the prolonged buyer’s market to a more balanced opportunity for buyers and sellers.

Sold homes were on the market for a median 70 days in September, unchanged from August, but down 30 percent from 101 days in September 2011. Thirty-two percent of homes sold in September were on the market less than a month, while 19 percent were on the market six months or longer. These numbers also suggest a new balance of power between buyers and sellers.

Housing recovery under way

The trend is upward, according to Lawrence Yun, the NAR’s chief economist.

“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” Yun said in a statement. “More people are attempting to buy homes than are able to qualify for mortgages and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”

In that region, sales dropped 3.4 percent to an annualized pace of 1.13 million in September, but were 0.9 percent higher than a year ago. The median price was $246,300, up 18.4 percent from September 2011 due to continuing shortages of for-sale homes.

In the Northeast, sales declined 6.3 percent to an annualized level of 590,000 in September, but were 7.3 percent higher than September 2011. The median price was $238,700, up 4.1 percent from a year ago.

In the Midwest, sales slipped 0.9 percent in September to a pace of 1.10 million, but were 19.6 percent higher than a year ago. The median price was $145,200, up 7.0 percent from September 2011.

In the South, sales increased 0.5 percent to an annualized level of 1.93 million in September, 14.2 percent higher than September 2011. The median price was $163,600, up 13.1 percent from a year ago.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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