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Home Prices Up for Eighth Consecutive Month on Growing Demand, Limited Inventory

by devteam November 19th, 2012 | Share

Existingrnhome sales increased 2.1 percent on a seasonally adjusted basis in Octoberrnaccording to data released today by the National Association of Realtors®.  In addition, declining levels of inventoryrncontributed to a continued increase in home prices. </p

Completedrnsales of existing homes including single-family homes, townhomes, condominiums,rnand co-ops increased to an annual rate of 4.79 million from a rate of 4.69rnmillion in September.  The latter raternwas revised downward from an original estimate of 4.75 million.  October sales were 10.9 percent higher thanrnthe 4.32 million rate in October 2011.</p

Salesrnof single-family homes rose 1.9 percent to a seasonally adjusted annual rate ofrn4.22 million from 4.14 million in September and increased 9.6 percent from thern3.85 million rate in October 2011.  Condornand co-op sales rose 3.6 percent to 570,000 from 550,000 the previous month andrnare 21.3 percent higher than a year earlier.</p

Lawrence Yun, NAR chief economist,rnsaid the growing demand with limited inventory is pressuring home prices inrnmuch of the country. </p

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The national median existing-homernprice for all housing types was $178,600 in October, which is 11.1 percentrnabove a year ago.  This marks eightrnconsecutive monthly year-over-year increases. rnThe last time this occurred was from October 2005 to May 2006.  The median existing single-family home pricernwas $178,700 in October, 10.9 percent higher than a year ago.  The median existing condo price wasrn$177,500 in October, up 11.7rnpercent from October 2011.</p

“Rising home prices have alreadyrnresulted in a $760 billion growth in home equity during the past year,” Yunrnsaid.  “Given that each percentage point of price appreciation translatesrninto an additional $190 billion in home equity, we could see close to a $1rntrillion gain next year.”</p

Thirty-one percent of sales were tornfirst-time homebuyers, down from 32 percent in September and 34 percent inrnOctober 2011.  Twenty-nine percent ofrnsales were all cash, little changed from either previous period.  Cash sales are primarily sales to investorsrnand they accounted for 20 percent of the market compared to 18 percent inrnSeptember and in October 2011. </p

Sales of foreclosed properties andrnshort sales each made up 12 percent of the existing home market inrnOctober.  Distressed home sales also hadrna combined market share of 24 percent in September and 28 percent in Octoberrn2011.   Foreclosures sold for an averagerndiscount of 20 percent below market value in October, while short sales wererndiscounted 14 percent.</p

Total housing inventory at the endrnof October fell 1.4 percent to 2.14 million existing homes available for sale, arn5.4-month supply4 at the current sales pace, down from 5.6 months inrnSeptember and 7.6 months a year earlier. rnThis is the lowest housing supply since February of 2006 when it was 5.2rnmonths.  </p

Homes were on the market for arnmedian of 71 days in October, one day more than in September and a 26 percentrnimprovement from the median of 96 days in October 2011.  Thirty-two percent of homes sold in October werernon the market for less than a month, while 20 percent were on the market forrnsix months or longer.</p

Existing home sales in the Northeastrnfell 1.7 percent to an annual rate of 580,000 but remained 13.7 percent abovernthe rate in October 2011.  Yun said that,rnwhile there was some impact from Hurricane Sandy which slammed the region laternin the month, “most October transactions were completed by the time the storm hit.  We expect an impact on Northeastern homernsales in the coming months from a pause and delays in storm-impacted regions.”  The median price in the Northeast wasrn$232,600, 4.6 percent higher than a year earlier.</p

Sales in the Midwest were up 1.8rnpercent to 1.11 million in October, 18.1 percent higher than one year earlier. Thernmedian price was up 10.6 percent on an annual basis to $145,600.</p

In the South,rnexisting-home sales increased 2.1 percent to an annual pace of 1.92 million inrnOctober and are 11.0 percent higher than October 2011.  The median price in the South was $152,200, which is 8.2 percentrnabove a year ago.</p

Westernrnregional sales were up 4.4 percent to an annual rate of 1.18 million, 3.5rnpercent higher than a year earlier.  Duernto tightening inventory the median price has risen 21.2 percent in the Regionrnover the last year to a median of $242,100.</p

NAR President Gary Thomas said thatrntoday’s record low interest rates which are contributing to the encouragingrnnumbers won’t last forever. “Inflationary pressures are expected to buildrnduring the next two years,” he said.  As a result, mortgage interest ratesrnwill also rise with inflation.  Buyers who are currently held back byrntight mortgage credit standards should work to improve their credit scores sornthey’ll be able to qualify for a mortgage while conditions are stillrnfavorable.”

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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