HOUSING MAINTAINS UPWARD TREND
For the first time in five years, existing home sales have increased for the past four months in a row, according to the National Association of Realtors. The combination of first-time buyers utilizing the housing stimulus tax credit along with more affordable conditions are resulting in higher sales. Additionally, the Department of Commerce reported a huge gain in new home sales in July at 7.2 percent including single-family, town homes, condominiums and co-ops.
As the housing market continues to improve, the psychology of the buyer is now “I don’t want to miss out on this once-in-a-lifetime drop in home prices” instead of “I can wait until later to buy.” Despite historically low mortgage rates, some buyers are opting to go with all-cash offers, especially in light of heavy competition for foreclosed homes in a number of markets.
A survey conducted by the National Association of Realtors (NAR) showed first-time buyers purchased 30 percent of homes in July and distressed homes accounted for 31 percent of transactions during that month. First-time buyers should try to make contractual offers by the end of September to avoid missing the November 30 closing deadline.
Repeat buyers are seeing increased activity as entry-level buyers are enabling some existing owners to sell and relocate. The release of the pent-up demand should help carry momentum forward in this time of sustainable recovery. If the inventory of homes continues to decline, prices should stabilize by the end of the year.
Home sales in the South in July rose 7.1 percent to annual pace of 1.95 million and are up 5.4 percent more than July 2008. The median price in the South was $164,500, down 7.1 percent from a year ago. Most price declines occurred six months ago and prices have primarily remained the same in the past few months.
The NAR predicts as confidence in the overall housing market keeps improving, demand will begin to increase at higher price points. It also speculates that the Gross Domestic Product (GDP) Index will increase by 2.5 percent by the first quarter of 2010. It expects the unemployment rate to be at 10.5 percent and the average 30-year fixed mortgage rate to be 5.6 percent by the end of the year.
More people applied for mortgages in the past week to buy a home and to refinance. The total application rate rose 7.5 percent from the previous week. In these changing market conditions and as interest in home sales continues to rise, realtors are the best resources for consumers since the transaction process has become more complex.