NAR Sees Soft Landing as Housing Bubble Transitions To Expansion
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Mostly in spite of but a little because of Hurricane Katrina, September
existing home sales were tied with last month as the second strongest
months in history according to figures released by the National Association
of Realtor on October 25.
Total existing-home sales were at a seasonally adjusted annual rate of 7.28
million units, a figure identical to those reported in August. This figure was
7.2 percent higher than the 6.79 unit sales reported in September, 2004. The
record for existing home sales was achieved in June, 2005, a rate of 7.35 units.
Existing home sales figures include single-family houses, condos, townhouses,
and co-ops.
As might be expected, home sales in the areas struck by Katrina were "a
fraction" of previous activity; possibly because so few homes remain in
many areas. But sales in areas on the fringe of the hurricane areas surged.
David Lereah, NAR's chief economist, said "We are now getting some
hard data from (the hurricane) region, with spot checks showing sharply higher
home sales to residents who were displaced by the hurricane. The sales surge
is more than offsetting declines in the disaster zone."
That increased home purchases in the gulf area are showing
up in the data less than a month after Katrina struck seems amazing, but may
bode well for the recovery in that area.
The NAR report states that the national average price for existing homes of
all types was $212,000 in September, an increase of 13.4 percent over the $187,000
recorded one year ago. The average single family home price was also $212,000, up
14.3 percent since last year but existing coop and condo prices were up "only"
9 percent. Single family homes sold at a seasonally adjusted rate of 6.38 million
units in September, up 0.6 percent since last month and 6.9 percent over last
year. Sales of condos and coops actually slipped 4.7 percent from the August
figures but were still running 10.2 percent above 2004 sales figures.
Housing inventories inched up 0.3 percent over August figures. There is currently
a 4.7 month supply of available homes at present sales rates.
Probably reflecting the hurricane-related activity mentioned earlier, the South
was the strongest region in September with sales rising 3.7 percent to a record
level of 2.83 million units, 12.3 percent higher than last year. The median
price in the South was $184,000, up 8.2 percent over last year.
Northeast sales were up 0.8 percent over August stats to an annualized figure
of 1.21 million units, a 7.1 percent increase in a year. The median price was
$245,000, nearly 11 percent higher than last year.
Both the West and the Midwest showed some slippage. Sales in the West declined
4.1 percent to an annualized rate of 1.62 million units but the region still
eked out a 1.3 percent gain over last year. The median price of $302,000 was
nearly 15 percent higher than last year.
Sales in the Midwest were down 3.0 percent to annual pace of 1.61 million in
September from a record 1.66 million in August, but were 4.5 percent higher
than a year ago. The median price in the Midwest was $175,000, 14.4 percent
higher than September 2004.
Chief Economist Lereah said the housing market is entering a period of transition.
"The underlying fundamentals of the housing market are solid
and sales will stay historically strong, but they will trend modestly down from
current peaks," he said. "Masked by the data are early signs that housing is
starting to wind down from a boom and will transition into an expansion"
- in other words, a soft landing.
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