Posted by: Prashant Gopal on January 26, 2009
Sales of existing single-family homes jumped an unexpected 7% in December from November’s seasonally adjusted annual rate, the National Association of Realtors said Jan. 26.
And the inventory of unsold homes at the end of December dropped 11.7 percent to a 9.3 month supply at the current sales pace.
The increase in sales is coming as both home prices and interest rates fall to affordable levels. The national median existing home was $175,000 in December, 15.3% lower than it was in December 2007, the Realtors said.
Bank-owned foreclosures in California, Florida, Nevada, Arizona and other speculative markets are largely behind the sales increases. Prices in those states have been falling fast but unemployment is spiking.
About 60.6% of homes for sale in the Las Vegas metro area during the third quarter of last year were affordable for people earning the area’s median income, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index. A year earlier, just 18% of the homes for sale were affordable.
Expect the affordability to be much greater when the next opportunity index report is released because interest rates have fallen dramatically since November.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.