This week it's all about sales. They're up in all four major regions of the country, and we're even seeing bidding wars breaking in some scattered markets, according to the latest survey from the National Association of Realtors.
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Sales of single family homes, townhouses, condos and co-ops surged by a little over 10 percent in October, and were 24 percent above where they were a year before.
Closed transactions rose by nearly 12 percent in the Northeast, 14. 4 percent in the Midwest, 12.7 percent in the South and by 1.6 percent in the West.
Why the big jump in activity? The number one reason, according to Dr. Lawrence Yun chief economist for the National Association of Realtors, was that first time buyers rushed to wrap up deals before the scheduled November 30th original expiration date of the $8,000 federal tax credit
That program has now been extended through next June 30th.
Another factor: The near record-breaking affordability of housing - as measured by the prices of homes in local markets around the U.S. compared with household incomes and monthly payments at current mortgage interest rates.
The affordability equation is now at its most favorable point for buyers since 1970. Interest rates for 30-year fixed loans have been hovering around five percent for weeks -- and recently dropped below that into the upper four percent range. A year ago, by comparison, the average 30-year rate was 6.2 percent.
House prices meanwhile have remained well below where they were a year ago -- down by 7 percent to a median price of about $173,000. In the southwestern states, Florida and the suburbs of Washington D.C., low prices, especially for entry-level houses, are triggering multiple-bid situations -- something that hasn't been seen since the heady days of the housing boom in 2004 and 2005.
The Realtors' Yun warns, though, that encouraging though this may appear, the market is not static and some of these dynamics could change in the months ahead.
Prices are flattening out and could even move up surprisingly in some areas in the coming months, if the economy cooperates. Interest rates could rise next Spring if the Federal Reserve phases out its program of heavy-duty investing in mortgage securities, as it says it plans to do.
In the meantime, inventory levels of unsold houses continue to drop ... and are now down to just a seven month supply nationwide on average. Since a six month supply is considered to be a balanced market, favoring neither sellers nor buyers, it looks like we're not too far off.
Written by Kenneth R. Harney
December 1, 2009
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