Existing-Home Sales Rise in Most States

Existing-home sales continued to recover in the
first quarter with gains in 49 states and the District of Columbia, while 22
percent of metropolitan areas saw prices rise from a year ago, according to the
latest survey by the NATIONAL ASSOCIATION OF REALTORS®.

Total state existing-home sales, including single-family homes
and condos, rose 8.3 percent to a seasonally adjusted annual rate of 5.14
million in the first quarter from 4.75 million in the fourth quarter, and are
only 0.8 percent below a 5.18 million pace during the same period in
2010.

Also in the first quarter, the
median existing single-family home price rose in 34 out of 153 metropolitan
statistical areas from the first quarter of 2010, including four with
double-digit increases; one was unchanged and 118 areas showed price
declines.

Lawrence Yun, NAR chief
economist, said home prices are all over the map. “The reading of quarterly
price data can be volatile because they are based on the types of homes that are
sold during the quarter. When buyers principally purchase distressed properties
in a given market, the recorded prices will be very low, which is what we’re
seeing now in much of the country,” he said. “Annual price data provides a
better guide about the direction of the market in those
areas.”

Distressed Sales Put Pressure
on Prices

The national median existing
single-family home price was $158,700 in the first quarter, down 4.6 percent
from $166,400 in the first quarter of 2010. The median is where half sold for
more and half sold for less. Distressed homes typically sold at a discount of
about 20 percent, accounted for 39 percent of first quarter sales, up from 36
percent a year earlier.

Yun said lower
priced homes have seen the best sales performance. “The biggest sales increase
has been in the lower price ranges, which are popular with investors and cash
buyers,” he said. “The preponderance of sales activity at the lower end is
bringing down the median price, so what we’re seeing is the result of a change
in the composition of home sales.”

Although sales are slightly below a year ago, the volume of homes
sold for $100,000 or less in the first quarter was 8.9 percent higher than the
first quarter of 2010, creating a downward skew on the overall median price.

The share of all-cash home purchases rose
to 33 percent in the first quarter from 27 percent in the first quarter of
2010.

More Investors in the
Market

Investors accounted for 21
percent of first quarter transactions, up from 18 percent a year ago, while
first-time buyers purchased 32 percent of homes, down from 42 percent in the
first quarter of 2010 when a tax credit was in place. Repeat buyers accounted
for a 47 percent market share in the first quarter, up from 40 percent a year
earlier.

“The rising sales trend in nearly
all states is a part of the healing process to clear off inventory. Sales need
to rise before prices can firm up,” Yun added.

NAR President Ron Phipps said strong sales of distressed homes are
exactly what the market needs. “The good news is foreclosures, which account for
two-thirds of all distressed homes sold, are selling very quickly,” he said.
“Short sales still take far too long to get lender approval, but it appears the
inventory of distressed property is peaking and will be gradually declining next
year. This means the market should slowly return to balance. We are encouraged
that recent home buyers are having exceptionally low default
rates.”

According to Freddie Mac, the
national commitment rate on a 30-year conventional fixed-rate mortgage averaged
4.85 percent in the first quarter, up from a record low 4.41 percent in the
fourth quarter, but below the 5.00 percent average in the first quarter of
2010.

A Closer Look at Price
Trends

In the condo sector, metro area
condominium and cooperative prices – covering changes in 53 metro areas – showed
the national median existing-condo price was $152,900 in the first quarter, down
10.4 percent from the first quarter of 2010. Eleven metros showed increases in
the median condo price from a year ago, one was unchanged and 41 areas had
declines.

Regionally, existing-home sales
in the Northeast increased 0.8 percent in the first quarter to a level of
800,000 but are 7.3 percent below the first quarter of 2010. The median existing
single-family home price in the Northeast declined 5.0 percent to $234,100 in
the first quarter from a year ago.

Existing-home sales in the Midwest rose 7.9 percent in the first
quarter to a pace of 1.09 million but are 5.0 percent below a year ago. The
median existing single-family home price in the Midwest fell 5.3 percent to
$124,400 in the first quarter from the same period in 2010.

In the South, existing-home sales increased 8.5 percent in the
first quarter to an annual rate of 1.96 million and are 2.8 percent higher than
the first quarter of 2010. The median existing single-family home price in the
South slipped 0.6 percent to $141,800 in the first quarter from a year
earlier.

Existing-home sales in the West
jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1
percent above a year ago. The median existing single-family home price in the
West fell 4.7 percent to $197,400 in the first quarter from the first quarter of
2010.

Source: NAR

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