Now that the federal government's homebuyer tax credit stimulus is in the rear view mirror, residential home sales are in a period of correction, according to RE/MAX LLC
While it's likely that the credit simply brought interested buyers to the market a few months earlier than they otherwise had planned, the Denver-based real estate franchise conglomerate says indications are that sales may correct further before they return to positive territory. The good news, though, is that home prices appear to be holding steady.
The July 2010 edition of the RE/MAX National Housing Report, which tracks market conditions in 54 major metropolitan areas across the country, reveals that closed transactions in July were 27.8 percent lower and prices 1.3 percent higher than during July 2009.
""We were expecting to see some pull back in home sales after the tax credit expired,"" said RE/MAX CEO Margaret Kelly. ""It's hard to know what will come next in this market, but we're looking for a return to slow steady growth by the end of the year.""
With the expiration of the tax credit, home sales are making a serious correction, and it may take a couple of months for sales to find their footing, according to RE/MAX. The company's report shows that residential sales for July were down 30.3 percent from June and were also down from July 2009 by 27.8 percent. Every one of the 54 metro areas in the survey recorded drops from both June 2010 and July 2009.
Despite the correction in sales numbers, median sales prices appear to be holding steady. RE/MAX reports that residential prices showed only a fractional loss from June at 0.5 percent, but were still over 1.3 percent higher than one year ago. The weighted average of all 54 median sales prices for July was $212,524.
As in June, July prices in California marked the highest year-to-year gains in the survey. Median prices in San Francisco rose 16 percent, Los Angeles prices were 8 percent higher, and San Diego prices were 6 percent above the same time last year. Other big gains were seen in Honolulu, where home prices rose 9 percent, and Boston, up 10 percent from last year.
For homes that sold in July in the survey's 54 metro areas, the average number of days it took from listing to signed contract was 82, just one day longer than the 81 day average in June and five days lower than the 87 average of July last year.
RE/MAX reports that the inventory of homes for sale in July fell slightly from June by 1.2 percent, and posted a 4.1 percent reduction compared to July 2009. The average months-supply of inventory in July was 9.1, which was up from the 8.5 mark in June.
This means that at the current rate of sales contracts, the average metro area would eliminate its inventory of homes for sale in just over nine months. RE/MAX explained that a six-month supply is considered a balanced market with equal footing for buyers and sellers.