Home Sales Jump Second Straight Month

By Mike Colpitts

Home sales jumped in September for the second straight month in a row, showing a recovery in the sale of existing homes, according to the National Association of Realtors, even while the inventory of homes listed for sale out-weighs market demand. The sale of single family homes, condos and townhouses reached an annualized rate of 4.53-million units from a revised 4.12-million in August.

Sales rose 10% for the month as near record low mortgage rates drove demand higher, despite the expiration of the federal home buyer tax credit. Inventory fell a modest 1.9% during the month, representing a 10.7-month supply at current sales levels. Residential sales remain 19.1% below the 5.60 million-unit pace set in September 2009 when first time home buyers were ramping up the volume of sales.

Home Interior

“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” said Lawrence Yun, NAR chief economist. “But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.”

Housing affordability coupled with near record low mortgage rates are driving the rebound in home sales, despite moratoriums put in place on foreclosures by lenders in 23 states. “The savings today’s buyers are receiving are not a one-time benefit,” said Realtor association president Vicki Cox, a Tucson, Arizona broker. “Buyers with fixed rate mortgages will save money every year they are living in their home.”

Mortgage rates on a 30-year, conventional fixed-rate loan fell to a record low 4.35% in September from 4.43% in August, according to Freddie Mac, which monitors contracted mortgage rates on a weekly basis.

The national median existing-home price for all housing types was $171,700 in September, according to NAR figures. Distressed sales account for 35% of transactions in September compared to 34% in August. Although the volume of re-sales has risen for two consecutive months, little improvement is developing in home prices, which remain weak in the majority of the country.