By Kevin Chiu
Pushed by record low mortgage rates and home prices that have fallen drastically from their peak highs, home sales are experiencing sharp rebounds in the Northeast and Midwestern regions of the U.S., according to the National Association of Realtors.
Existing home sales jumped 10.7% to an annualized pace of 620,000 units in the Northeast during December, reaching 3.3% above year ago levels, NAR said. Midwest sales rose 8.3% during the month on a pace of 1.04 million homes, condos and townhouses. The increase accounted for a 9.5% rise from a year earlier.
However, home prices, impacted by the record high foreclosure crisis dropped 7.9% on median values in the Midwest from a year ago. The prices on homes that are being purchased in most areas of the country are continuing to decline. Fifty-five cities mainly confined to the Midwest and Northern regions of the nation, are forecast by Housing Predictor analysts to inflate in value during the year.
Single family home sales rose 4.6% across the U.S. during the month, while condominium and co-op sales saw a sharper 8.7% jump in sales to an annualized rate of 500,000 units in December. Resale prices on both homes and condos dropped during the month.
“We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” said newly elected NAR President Moe Veissi. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”
Housing sales, however, in the South rose an average of just 2.9% in the last month of the year, and 2.6% in the West. Nonetheless, the smaller increases were driven by lower mortgage rates and lower prices paid for homes and condos in all but a handful of markets.
The average rate for a 30-year fixed rate mortgage hit 3.88% last week after averaging 3.96% in December. The historically low rates are expected to drive an increase in housing sales of about 5% during 2012.