Home sales in the first quarter of 2012 were the highest seen in any first quarter since 2007 according to data released today by the National Association of Realtors® (NAR). Total existing home sales, including single-family and condo units, increased 4.7 percent to a seasonally adjusted annual rate of 4.57 million in the first quarter from a downwardly revised 4.37 million in the fourth quarter, and were 5.3 percent above the 4.34 million units sold during the first quarter of 2011 when sales spiked.
Despite the rise in sales, house prices continued to slip; the median single family home price was $158,100, down slightly from the median of $158,700 one year earlier. Distressed homes, which are often deeply discounted, accounted for 32 percent of first quarter sales, down from 38 percent in the first quarter of 2011. The median price for a condo in the U.S. was $157,200 compared to $152,100 a year earlier.
NAR also reported that median existing single-family home prices rose in 74 out of 146 metropolitan statistical areas (MSAs) during the quarter compared to the same quarter in 2011. Prices declined in 72 SMAs. In the fourth quarter of 2011 only 29 areas showed year-over-year gains. Eighteen metros showed increases in their median condo price from a year ago and 34 areas had declines.
Lawrence Yun, NAR chief economist, said there is some volatility in the price performance. "Home prices are more volatile than normal because of sudden upswings in buyer activity in some localities, and also are affected by the prevalence of distressed sales," he said. "Home prices lag sales activity because the transactions were negotiated mostly in the previous quarter. Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future."
The inventory of homes for sales has been trending down since setting a record of 4.04 million in the summer of 2007. There were 2.37 million existing homes available for sale at the end of the first quarter, 21.8 percent below the number in the first quarter of 2011.
Yun said this drop in housing inventory is a big part of the story. "We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges. This is good news for many sellers who wish to list now, or for those waiting for prices to improve."
One third of homes purchased in the first quarter were bought by first-time buyers, the same as in the fourth quarter and investors accounted for 22 percent of sales compared to 19 percent. The share of all-cash purchases, most of which are sales to investors, was 32 percent, up from 29 percent.
Sales in the Northeast region were up 8.6 percent from the previous quarter and 6.6 percent year-over-year. The median price of a single-family home dipped 3.2 percent on an annual basis to $226,300.
In the Midwest, existing-home sales rose 5.5 percent in the first quarter and are 11.7 percent higher than a year ago. The median existing single-family home price in the Midwest increased 0.8 percent to $125,300 in the first quarter from the same quarter in 2011.
The South saw a sales increase of 2.1 percent quarter-over-quarter and 4.1 percent year-over-year and the median price rose 1.2 percent to $143,600. In the West the median price was down 0.9 percent to $196,200 while sales rose 5.9 percent in the first quarter and are up 1.4 percent from the previous year.
NAR provided a new breakout of income requirements on a metro basis which shows most buyers have the necessary income to buy a home in their area, assuming a favorable credit rating. The median income nationally was $61,000 in the first quarter and to qualify to purchase a home with a 20 percent down payment requires an annual income of $29,257 and an income of $34,743 with 5 percent down. There is a wide variability regionally; purchasing with 20 percent down would require a $41,878 annual income in the Northeast but only $23,188 in the Midwest.
"Qualifying incomes are well below median incomes in most of the country, which means home buyers generally can stay well within their means," Yun said. "For example, a buyer in Indianapolis making a 10 percent downpayment would need an annual income of $24,000 to purchase a median-priced home, while in Seattle it would be $55,300. For now, buyers are facing an extraordinarily advantageous situation if they can obtain a mortgage."