According to the National Association of Realtors, the 10% increase in existing-home sales for September affirms that “a sales recovery has begun”.
Existing-home sales jumped 10.0% to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August. The September figure is well below last year’s rate of 5.60 million, but last year’s sales numbers were inflated by the approaching deadline of the home buyer tax credit.
“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.”
NAR president Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22% less than five years ago when they were bid up by the biggest housing rush on record.”
Housing affordability has improved, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
It has become a very strong buyers’ market, especially for families with long-term plans as housing affordability conditions today are 60 percentage points higher than during the housing boom. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home — this is truly an example of how homeownership builds wealth over the long term,” Golder added.
Total housing inventory at the end of September fell 1.9% to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12.0-month supply in August. Raw unsold inventory is 11.7% below the record of 4.58 million in July 2008.