Of the homes sold in September, 32% were first-time home buyers. With more and more people entering the market, the persisting obstacle for most is still the restrictive lending environment. In a plea to banks and policy makers, NAR President Ron Phipps said, “We need to remove the roadblocks to a housing recovery—not place more obstacles in the way of financially qualified buyers.”
With an increasing demand and shrinking inventory, it is hoped that banks will begin to see the market potential and start to lend to otherwise creditworthy home shoppers, opening the road to a more rapid recovery. While consumer confidence still remains at all-time lows, retail spending increased 1.1% last month, a positive sign of growth fueled by the approaching holiday season, which could propel the U.S. into a promising new year.
Home sales were 4.91 million in September, down 3.3% from a strong August in which were 5.06 million, but still 11.3% above September 2010. Lawrence Yun, NAR chief economist, states, “affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable—this speaks to an unfulfilled demand.” If lending standards loosen, we can expect to see an increase in home sales.
Homes prices were down, with a 3.5% drop in September compared to a year ago. The national median price for homes in September was $165,400, with distressed properties, foreclosures, and short sales still accounting for 30% of sales. This is a great opportunity for those potential buyers still thinking about purchasing a home, especially as the housing industry begins to show increasing signs of stability.
Inventory- Month's Supply
With stronger sales than a year ago, the amount of homes for sale was reduced to 3.48 million units, or an 8.5-month supply at the current sales volume. With the lowest new housing construction in almost fifty years, the inventory of homes on the market is projected to continue to decline, which is a positive sign that prices could begin to climb again.
Source: National Association of Realtors
Mortgage rates were down again, from 4.35% in September of last year to 4.11% this September. While the Federal Reserve continues to put downward pressure on interest rates to spur sales, Congress’s recent action to lower loan limits has further tightened lending among banks. This had the biggest impact in the Western states, which experienced an 8.8% drop in sales. This was mainly due to the concentration of more expensive properties in California, where buyers rushed to purchase properties in August before loans limits dropped on the October 1 deadline.
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