Sales jump 10 percent in Sept. for existing homes, but Washington region's sales dip
Monday, October 25, 2010; 6:37 PM
Sales of previously owned homes are bouncing back from their anemic levels last summer, but the gains might not be sustainable if the abrupt halt in foreclosures in some states drags out and pulls down future sales.
In September, sales of existing homes jumped 10 percent from the previous month to a seasonally adjusted rate of 4.53 million, the National Association of Realtors reported Monday. Sales are down about 19 percent from September 2009.
Buying activity rose in every region of the country from August to September, led by a 14.5 percent increase in the Midwest. Sales jumped for all housing types, including single-family homes, condominiums and townhouses, the group reported.
But the national median price for existing homes fell 2.4 percent from a year ago to $171,700 in September.
In the Washington region, the median price rose 4 percent, but sales were down 12.5 percent from last year's levels.
A separate report released Monday by research firm Delta Associates revealed a similar trend in the region, showing that the average home price rose to $410,839 in the third quarter, up 6.2 percent from a year ago and up 3.1 percent from the previous quarter. But area sales dropped nearly 23 percent from the previous quarter and dropped 16 percent from a year ago.
The drop in sales means that the supply of homes in the region has climbed back to the same levels as earlier this year, Delta reported. The region has an average of 6.9 months of homes for sale in September, meaning it would take that long to sell the area's for-sale homes at the current pace, which is up from 5.4 months one year ago and above the six-month level that's considered healthy for the area.
Nationwide, the Realtors group said, the overall boost in September sales was the strongest monthly gain in nearly 28 years, aided by record-low interest rates, which hit 4.3 percent on average in September for a 30-year fixed-rate mortgage.
But the group warned of choppy times ahead because of the recent foreclosure moratoriums put in place by several lenders in response to widespread reports of foreclosure paperwork errors.
Paul Dales, an economist at Capital Economics, said he does not expect a "real recovery" soon, even though sales of existing homes have risen 18 percent nationally in just two months.
"Such gains are only possible because sales had fallen so far," Dales said in a note to clients. Sales are still 22 percent below April's peak of 5.79 million, when buyers were rushing to take advantage of a lucrative federal tax credit that has since expired, he said.
The current freeze in foreclosure activity could depress home sales in October, given that foreclosures made up 35 percent of September's sales activity, Dales said.
"Even if sales on just 15 percent of foreclosed homes fall through, that may mean 240,000 fewer foreclosed homes are sold in October," he said.
Further weighing down sales for at least three years is the poor economic climate and high unemployment, Dales said.
The Washington region was not immediately affected by the various foreclosure freezes, which were limited to 23 states where lenders have to win a court order to initiate action. Since Bank of America suspended foreclosures nationwide, however, other lenders have since selectively halted foreclosures here. And at least two area circuit courts - in Prince George's and Montgomery counties - are reviewing cases for paperwork flaws.