Positive Market Factors Surfacing

July 30, 2008

Existing-home sales — including single-family, townhomes, condos and co-oops — increased by 2 percent in May from a level of 4.89 million units in April, according to a report from the National Association of Realtors. Total housing inventory at the end of May fell 1.4 percent. This represents a 10.8-month supply at the current sales pace, down from a 11.2-month supply in the previous month.

"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," said Richard Gaylord, NAR president. "Today’s buyer plans to stay in a home for 10 years - a good strategy for building long-term wealth."

Lawrence Yun, NAR’s chief economist, added this note: "The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down significantly. Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets."

Another indication of an improving real estate market was noted by Frank Nothaft, chief economist for Freddie Mac. "The recently released S&P-Case Shiller house price indexes for April offer a few surprises," he said. "The decline in the 20-city composite index was less than that in March, and eight cities had positive monthly growth in April, compared to only two cities in March. Also, May’s new home median sales price increased from the prior month, according to the Commerce Department."

source: Jim Woodard

Posted in Real Estate