By Kevin Chiu
Home sales jumped for the second month in a row in November, increasing 4% after rising almost half as much the previous month, according to the National Association of Realtors. The jump in sales accounts for an annual adjusted rate of 4.42 million existing homes sales.
The rise also accounts for a 12.2% jump above the pace of sales made a year ago. “Sales reached the highest mark in 10 months and are 34% above the cyclical low point in mid-2010,” said association economist Lawrence Yun. “A genuine sustained sales recovery appears to be developing.”
Although Yun is optimistic about a recovery in housing sales with the increase in sales, prices for homes being sold in most areas of the country continue to decline. Foreclosures and bank assisted short sales, in which lenders cooperate to sell a property at less than what is owed on a mortgage are at record levels, and more than 4-million homes in the shadow inventory are waiting to be listed on the market.
Sales that fall out of escrow or the sales process are also holding the housing market back from a wider recovery, with 33% or one in three sales failing during the month, according to an NAR survey. Only 9% fell through a year ago.
The contract failures are being caused by a heavy volume of denied mortgages, problems with loan underwriting and appraised values coming in below negotiated prices. Inventory, however, listed on the market by association members for sale dropped 5.8% to 2.58 million estimated homes during the month, which represents a 7 month supply at current sale volume. The inventory was at 7.7 months in October.
A healthy or balanced supply of homes is considered to be six months, but many of the homes that have come off the market in the last month are due to the holiday season, which is typical for any year.
The national median existing home price for all housing types was down 3.5% in November to $164,200 from one year ago. NAR does not track the average price of homes sold. Distressed homes, foreclosures and short sales accounted for 29% of NAR sales, the highest percentage of which were foreclosed properties.