Most States See Rising Resales in Third Quarter

by NAR Research Staff

Low interest rates, the first-time buyer tax credit and the beginnings of an economic recovery all led to rising home sales in most states in the third quarter of 2009. In addition, home prices moderated in many metro areas during the same period.

According to the latest quarterly report from the National Association of REALTORS®, total state existing-home sales, including single-family and condos, increased 11.4 percent to a seasonally adjusted annual rate of 5.30 million units. Third quarter resales were up 5.9 percent above the 5.01 million-unit pace in the third quarter of 2008. Forty-five states and the District of Columbia experienced increased sales from the previous quarter, with 28 states and the District seeing double-digit gains. Year over year, sales were higher in 32 states and Washington, D.C.

One significant factor behind the improving sales was the first-time buyer tax credit. While it is difficult to quantify the actual impact of the tax credit, it is safe to say that it gave many first-time purchasers the confidence to get "off the fence" and take advantage of extremely affordable housing conditions. In fact, the buying conditions this year are the most favorable on record - ever since NAR began tracking affordability in 1970.

Home Sales

The biggest sales gain between the second and third quarters was in North Dakota, which experienced an increase of 42.3 percent. Rhode Island was next, posting a 26.5 percent rise in resales. Pennsylvania followed with an increase of 25.6 percent in existing-home sales.

Regionally, existing-home sales in the Northeast surged 16.7 percent in the third quarter to a seasonally adjusted annualized rate of 930,000 units; Northeast resales were up 6.9 percent compared to the third quarter of 2008. In the Midwest, existing-home sales jumped 13.2 percent in the third quarter to a pace of 1.20 million units, 5.2 percent above a year ago. In the South, existing-home sales rose 11.3 percent in the third quarter to an annual rate of 1.97 million units. That's 5.9 percent higher than in the third quarter of 2008. Existing-home sales in the West increased 5.6 percent in the third quarter to an annual rate of 1.19 million units, 4.6 percent above a year ago.

Metropolitan Area Home Prices - Single Family Homes

While prices continued to decline, those declines have moderated somewhat. During the third quarter of this year, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with prices posted in the third quarter of 2008. But 30 metros had price gains. The national median existing single-family price was $177,900, 11.2 percent below the price reported in the third quarter of 2008. Distressed sales - foreclosures and short sales - accounted for 30 percent of transactions in the third quarter. Those distressed sales continued to weigh down median home prices because they sell at a discount relative to prices of traditional homes.

Third-quarter metro area median prices for single-family homes ranged from $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The largest year over year price increase for an existing single-family home was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2 percent from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price
increased 14.3 percent to $115,600.

As would be expected, there were differences in home price gains/declines by region. The median existing single-family home price in the Northeast declined 9.4 percent to $244,500 in the third quarter from the same quarter in 2008. The largest price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8 percent from the third quarter of 2008.

In the Midwest, the median existing single-family home price declined 5.5 percent to $150,200 (on a year over year basis), but some Midwest metros posted gains. After Davenport-Moline-Rock Island (see above), the next strongest metro price increase in the region was in Cedar Rapids IA, where the median price of $145,700 was 7.6 percent higher than a year ago. The median single-family home price in Bismarck ND was $157,200, up 7.5 percent from the third quarter of 2008.

The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9 percent from a year earlier. But that region also boasted some metros with price gains. After Cumberland (MD/WV) Oklahoma City OK registered the next strongest price increase in the region - up 9.1 percent. In Shreveport-Bossier City LA median single-family home prices rose 8.6 percent from a year ago to $152,300. The median existing single-family home price in the West was $224,000 in
the third quarter, 16.4 percent below the price registered in the third quarter of 2008. The best metro price performance in the West was in Yakima WA, where the median price of $158,400 rose 2.7 percent
from a year earlier. The Denver-Aurora CO area also experienced a price increase - up 1.8 percent to $229,100.

The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas. But broader stabilization will require a steady stream of financially qualified buyers to further reduce inventory and so return us to a self-sustaining market. Yes, foreclosures will continue to come on the market, but rising sales from the recently enacted expanded tax credit should stabilize home prices by next spring and help to stem
future foreclosures.

Condo/Co-op Prices

Metro area condominium and cooperative prices - covering changes in 55 metro areas - showed the national median existing-condo price was $178,000 in the third quarter, down 15.4 percent from the third quarter of 2008. Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise NV to $432,800 in San Francisco-Oakland-Fremont CA. Four metros showed annual increases in the median condo price and 51 areas posted declines. The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos (up 13.3 percent), followed by the Cincinnati-Middletown area (up 2.0 percent), the Toledo, Ohio, area (up 1.7 percent) and the Indianapolis metro (up 0.8 percent).

What the Numbers Tell Us

The wide range of market performance and reversals around the country, ranging from double-digit gains to double- digit losses in both sales and prices, underscores just how local real estate truly is. This is obviously a market in transition. But the recent extension and expansion of the home buyer tax credit program is likely just what the market needs. As more first-time and repeat buyers take advantage of that program, the market should become more balanced and stable.

 

More details on the latest quarterly figures can be found here >

For an interactive median price map, click here >

For an interactive state sales map, click here >