In yet another sign of stabilization within the residential real estate market, strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter of 2009, according to a survey released Thursday by the ""National Association of Realtors"":http://www.realtor.org/ (NAR).[IMAGE]
Compared to the third quarter, existing-home sales increased in 48 states and the District of Columbia, and 32 states even saw double-digit gains. In addition, year-over-year sales were higher in 49 states and the District of Columbia, and all but three states had double-digit annual increases, NAR reported.
Up from 5.29 million sales in the third quarter, total state existing-home sale jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter of 2009. Of these transactions, distressed property accounted for 32 percent, down from 37 percent during the fourth quarter of 2008.
""The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,"" said Lawrence Yun, NAR chief economist. ""With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.""
According to NAR's survey, many metro areas are already seeing prices rise from a year earlier. In the fourth quarter of last year, 67 out of 151 metropolitan statistical areas (MSAs) reported higher median existing single-family home prices in comparison with the fourth quarter of 2008. Double-digit increases were reported in 16 of these areas, one MSA reported no change in prices, and 84 metros had price declines. This marked an improvement, though, from the third quarter when only 30 MSAs showed annual price increases and 123 reported a drop in prices.
Despite price increases in many metro areas, the national median existing single-family price--coming in at $172,900--was down 4.1 percent below the fourth quarter of 2008. However, Yun said this is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices.
""Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable,"" Yun said.
As expected, both sales and prices of existing single-family homes in the fourth quarter varied from region-to-region.
Existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a rate of 1.03 million, an increase of 33.6 percent from the fourth quarter in 2008. Year-over-year, the median existing single-family home price in this region declined 5.6 percent to $234,900.
""In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, New York, are generally showing consistent price gains,"" Yun said. ""Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, New York and Boston.""
Existing-home sales in the Midwest surged 14.5 percent in the fourth quarter to a rate of 1.38 million. Compared to the same quarter the year prior, existing-home sales were up 29.9 percent. Accounting for the majority of metro areas experiencing double digit gains, the median existing-home price inched up 1.1 percent to $141,000 in the fourth quarter from the same period in 2008.
According to Yun, markets with high unemployment rates in Ohio and Michigan experienced large price swings. In addition, he said big price gains in many Midwestern areas were due to a more normal range of home sales in contrast with predominantly foreclosed sales a year ago.
Soaring to annual rate of 2.23 million, existing-home sales in the South rose 13.8 percent on a quarter-to-quarter basis and 28.2 percent year-over-year. At $153,000, the median existing single-family home price in the fourth quarter was down 2.4 percent from one year earlier. However, Yun said affordable markets in the South that already have relatively better local economies--such as Houston; Oklahoma City; and Shreveport, Louisiana--are seeing healthy price gains.
In the West, existing-home sales in the fourth quarter increased to an annual rate of 1.38 million, jumping 16.2 percent from the third quarter of 2009 and 18.2 percent from year-ago levels. Marking the most notable price decrease, the median existing single-family home price in the West was $227,200 in the fourth quarter, falling 8.9 percent from the fourth quarter in 2008. Despite the region's overall decrease in prices, Yun said markets in the West such as San Francisco and Denver are showing double-digit price increases, and other markets have begun to firm up.
According to Vicki Cox Golder, NAR president, near-term market conditions will remain favorable. ""Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,"" she said.