October 2012 Market Update
The national housing market continues to recover, indicated by consistent increases in both home sales and prices. Inventories in much of the United States are primarily balanced, which favors neither sellers nor buyers. However, large pockets of the country are experiencing inventory shortages, which puts pressure on prices. Many of the hardest-hit areas during the downturn now have some of the tightest inventories. The return of price appreciation and a stronger market, particularly in those locations, is a welcome signal of returning market health.
“Some buyers are frustrated with mortgage availability. If most of the financially qualified buyers could obtain financing, sales would be about 10 to 15% stronger, and the related economic activity would create several hundred thousand jobs over the period of a year,” states NAR President Moe Veissi.
Despite difficult mortgage qualifying conditions sidelining some buyers, others are still taking advantage of excellent housing affordability conditions, which is evidence of notable stored-up housing demand that accumulated since 2007. With the housing market coming close to a full recovery and mortgage rates hitting new record lows, the time to buy is now.
Home sales this month rose 7.8% from last month to a seasonally adjusted rate of 4.82 million units, a 9.3% increase from last year. Distressed homes (which include short sales and foreclosures that traditionally sell for 15%–20% less on average compared to nondistressed homes) accounted for 22% of August sales, down from 25% of sales last month and 31% of sales last year. Although the amount of distressed properties is decreasing from month to month, they are still high by historic standards.
Home prices continue to rise due to shrinking inventory and an increase in demand. The current median home price is $187,400, up 9.5% from a year ago and down just 0.2% from last month. This has been the sixth consecutive month of year-over-year price gains, the largest year-to-date rise since 2005.
Inventory- Month’s Supply
Housing inventory rose to 2.47 million homes available for sale—a 6.1-month supply—up 2.9% from last month and down 18.2% from last year’s 8.2-month supply. This marks the ninth consecutive month of inventory at a 6-month supply, a clear indicator of a balanced market and full-scale housing market recovery. Robust improvement in employment is the primary concern remaining, and as that improves the housing market recovery will be on firmer footing for the future.
Source: National Association of Realtors
Mortgage rates this month at or around 3.49% are back at record lows. The decline in the 30-year fixed rates is partially due to a result of the Federal Reserve’s announcement of “QE3.” QE3 is a new bond purchase plan which should help stimulate the ongoing housing recovery. Home buyer affordability remains high for home buyers who buy now while rates are low.
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