Pricing attractive to buyers
In August, sales of existing homes rose 7.7 percent from July, according to the National Association of Realtors (NAR) and beating most economists’ projections. Existing home sales are up 18.6 percent from a year ago. Buyers are coming back to the table, attracted by lowered home prices which are down 5.1 percent from this time last year, as well as low interest rates.
“All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” said NAR President Ron Phipps.
Dr. Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”
“We had some disruptions from Hurricane Irene in the closing weekend of August, when many sales normally are finalized, along the Eastern seaboard and in New England,” Yun said. “As a result, the Northeast saw the smallest sales gain in August, and some general impact is expected in September with widespread flooding from Tropical Storm Lee. Aberrations in housing data are possible over the next couple months as markets recover from disrupted closings and storm damage.”