Home Sales Up, Prices Down
April 18, 2008
It has been seven months since existing home sales rose. Last February marked the end of that slump. The good news in home sales is attributed to sharply falling home prices which may have led more people to buy.
According to the National Association of Realtors, home re-sales rose to a 5.03 million annual rate, a 2.9 percent increase from January’s unrevised 4.89 million annual pace. The last time existing home sales increased was July of last year. However, sales (year over year) were down 23.8 percent from February 2007.
While it is good news that more existing homes are being sold, the prices for these homes is falling. The median home price was $195,900 in February, down 8.2 percent from $213,500 in February 2007. Of concern to many is that the 8.2 percent drop was the largest on record, according to the National Realtors Association. The median price in January 2008 was $199,700.
While lower prices certainly attract more buyers, some buyers are still waiting to see if prices continue to fall. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” economist Lawrence Yun of the NAR recently said.
The good news is shadowed by other news as well as lenders begin to tighten up on their lending standards. Many of those who would be buying in this market are simply not able to meet the new, tougher standards. In essence, these buyers are locked out of the market for the time being.
On a regional basis, existing-home sales in February rose 2.5 percent in the Midwest, 11.3 percent in the Northeast, and 2.1 percent in the South. For the West, demand fell 1.1 percent.