WASHINGTON, Oct. 23, 2009
U.S. Home Resales Up 9.4%; Prices Down
Resales Hit Highest Mark in More Than 2 Years; Median Prices Down 8.5% From Last Year
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In a photo made Oct. 20, 2009, a "sold" sign is shown in front of a home in Carmel, Ind. (AP Photo/Michael Conroy)
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Interactive Eye On The Economy In-depth features on U.S. markets, taxes, employment and the Federal Reserve.
Home resales rose in September to the highest level in more than two years, beating expectations, as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.
The National Association of Realtors said Friday that sales rose 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September, from a downwardly revised pace of 5.1 million in August. Sales had been expected to rise to an annual pace of 5.35 million, according to economists surveyed by Thomson Reuters.
The median sales price was $174,900, down 8.5 percent from a year earlier, and slightly lower than August's median of $177,300.
"There's a mini-boom going on in the housing market," said Thomas Popik, who conducts a monthly survey of real estate agents for Campbell Communications, a research firm.
The inventory of unsold homes on the market fell about 7 percent to 3.63 million. That's a 7.8 month supply at the current sales pace, and the lowest level since March 2007. Nationwide sales are up nearly 24 percent from their bottom in January, but are still down 23 percent from four years ago.
Sales rose around the country, especially in the West, where they grew 13 percent from a month earlier. Foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.
First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. These buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000, if the sale is completed by the end of November.
The tax credit is so important to some buyers that they are adding a clause to their contracts, allowing them to back out if the sale doesn't close by Nov. 30.
While home sales and housing construction have risen steadily after hitting bottom earlier this year, most economists believe that the worst isn't over for home values.
Prices could see a double dip because rising unemployment is causing more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to be unable to afford their monthly mortgage payment.
Unemployment Figures Cloud Recovery Hopes
"There's more supply that's going to come into the marketplace," said Stan Humphries, chief economist at real estate Web site Zillow.com. "That additional supply will outpace demand."
With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.
Realtors and homebuilders are pressing lawmakers to do so, arguing that the tax credit is crucial to get the housing market back on its feet.
"We are not there in terms of removing the consumer fear factor," said Lawrence Yun, the Realtors' chief economist.
One potential roadblock, however, emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.
At a hearing on Thursday the Treasury Department's inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old.
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Add a Comment See all 19 Comments
- Home prices are down 8.5%???
Gee, if I only had a job . . . - Reply to this comment
- Investers are buying these houses on the cheap and will hold on to them until the economy picks up. Then sell them for enormous profits. The banks that held the paper were mostly foreclosures. They also made their money back on the bailout cash supplied by the government. Again the little men and women lose out on the deal.
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- ''Investers are buying these houses on the cheap and will hold on to them until the economy picks up"" <You don't really believe that ... do you?>
""The banks that held the paper were mostly foreclosures. They also made their money back on the bailout cash supplied by the government."" <you mean, cash supplied by US taxpayers>
""Again the little men and women lose out on the deal."" <Not if...as you said> ""Again the little men and women lose out on the deal."" <because I will be in hog heaven if that occurs, and I am the little guy. I own one home but I am seriously thinking about buying a rental>
- @Skirt-Lifter
''Investers are buying these houses on the cheap and will hold on to them until the economy picks up"" <You don't really believe that ... do you?>
Yes I do. Real estate investors I know are currently doing that right now, hoping to reap a profit later.
- "...Real estate investors I know are currently doing that right now, hoping to reap a profit later...."
They are stupid, then. That ship has sailed. If you have the time to buy a home and rent it out, that's not a bad deal. You better have the ability and enjoy doing a lot of home repairs, though, otherwise the contractors fees will eat you alive. But buying a home and letting it sit empty for years is extremely foolish.
- by tmittelstaed October 23, 2009 4:34 PM EDT
"...Real estate investors I know are currently doing that right now, hoping to reap a profit later...."
They are stupid, then. That ship has sailed. If you have the time to buy a home and rent it out, that's not a bad deal. You better have the ability and enjoy doing a lot of home repairs, though, otherwise the contractors fees will eat you alive. But buying a home and letting it sit empty for years is extremely foolish.
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Land, however -- especially in unfinished or planned developments -- is a good speculative option. That is if you can afford to pay the property taxes (and the assessors aren't working in collusion with real estate speculators to inflate the worth of the land.) I know real estate investors doing that.
But buying a house, unless it's a rental property, is a chump bet. I don't know any real estate investors doing that. The bottom housing market STILL hasn't hit bottom and is not expected to for at least another year, year-and-a-half. That's why real estate investors you claim to know that are currently buying houses are stupid.
- [But buying a house, unless it's a rental property, is a chump bet. I don't know any real estate investors doing that. The bottom housing market STILL hasn't hit bottom and is not expected to for at least another year, year-and-a-half. That's why real estate investors you claim to know that are currently buying houses are stupid. ]
i know someone who has just bid on a single family home that's listing for just over $500k ... was purchased for over $800k a few years earlier ... and he's offering in the high $300k.
if you have the cash ... as he does ... and you can wait ... as he can ... it's a steal.
it wasn't his stupidity that put him in a position to have that cash to be able to do this.
- ''Investers are buying these houses on the cheap and will hold on to them until the economy picks up"" <You don't really believe that ... do you?>
- Must be Bush's fault
- Reply to this comment
- Just another "Cash for Clunkers", but this time for houses. If you are eligible and were planning on buying it is a sweet deal, but all it will do is skew the numbers so these "experts" can claim one thing this month and something else next year.
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- Oh really? The same ones who keep flip flopping on how we are in a recovery. I have news for these idiots. The American people are not stupid. The jobless rate again was over 500,000 for the last mont.. Who predicted that? Nobody because they are clueless.
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- Oh well. I cannot get a jumbo loan to help me pay for all this happiness because my take home pay is too little.
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- "buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000..."
10% is better than nothing I suppose but 10% of the sales price would of course mean the home only costs $80,000. Even ghettos don't have homes that cheap.
And I don't understand how it is that with the job losses and unemployment figures and foreclosures, how sales can be climbing unless people are moving "down", as it were. The article, of course, does not address that.
And how is it that new home construction is on the rise? Who is having new homes constructed? Maybe Wall Street executives and bank CEO's? Overpayed professional sports players? Hollywood icons? Who?
I know it's not the average American!
I have little faith in the media anymore to research information and provide fact checking before they print that information. The quality of reporting is dismal anymore.
If Obama and other Presidents and politicians are right about one thing, it's that our educational system in this country needs major, major reform. Incompetence, inefficiency and outright stupidity reign supreme. - Reply to this comment
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- [And I don't understand how it is that with the job losses and unemployment figures and foreclosures, how sales can be climbing unless people are moving "down", as it were. The article, of course, does not address that.]
not everyone is hurting. some people have been very successful in the last few years ... and they have a lot of dollars. many people that do have assets are moving them back into real estate thinking the bottom is past and gains can be gotten.
check this out (for Q3 2009 ... returns of 25% for the quarter):
http://www.cohenandsteers.com/opmc_perfomance.asp?cusip=1
or this (for Q3 2009 ... returns of 35% for the quarter)::
http://www.cohenandsteers.com/opmc_perfomance.asp?cusip=12
- [And I don't understand how it is that with the job losses and unemployment figures and foreclosures, how sales can be climbing unless people are moving "down", as it were. The article, of course, does not address that.]
- Predicted? By who?! The same morons that didn't see the biggest financial disaster since the Great Depression coming? HAHA!!
And what kills me is that "journalists" buy into this tripe and invent fantastical headlines for it! - Reply to this comment
