The existing home sales market in the United States continued to recover in the first quarter of this year with gains recorded in 49 states and the District of Columbia, while 22% of the available metropolitan areas saw prices rise from a year ago, according to the latest report from the National Association of Realtors.
Total state existing home sales, including single family homes and condos, were up 8.3% to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8% below a 5.18 million pace during the same period in 2010.
Also in the first quarter, the median existing single-family home price rose in 34 out of 153 metropolitan statistical areas (MSAs) from the first quarter of 2010, including four with double-digit increases, while one was unchanged and 118 areas showed price declines.
NAR chief economist Lawrence Yun said that the quarterly price data could be volatile because they are based on the types of homes that are sold during the quarter. ‘When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country. Annual price data provides a better guide about the direction of the market in those areas,’ he explained.
The national median existing single-family home price was $158,700 in the first quarter, down 4.6% from $166,400 in the first quarter of 2010. Distressed homes, typically sold at a discount of about 20%, accounted for 39% of first quarter sales, up from 36% a year earlier.
Yun said lower priced homes have seen the best sales performance. ‘The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers. The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales,’ he added.
Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9% higher than the first quarter of 2010, creating a downward skew on the overall median price. The share of all cash home purchases rose to 33% in the first quarter from 27% in the first quarter of 2010.
Investors accounted for 21% of first quarter transactions, up from 18% a year ago, while first time buyers purchased 32% of homes, down from 42% in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47% market share in the first quarter, up from 40% a year earlier.
‘The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,’ Yun said.
NAR President Ron Phipps said strong sales of distressed homes are exactly what the market needs. ‘The good news is foreclosures, which account for two thirds of all distressed homes sold, are selling very quickly. Short sales still take far too long to get lender approval, but it appears the inventory of distressed property is peaking and will be gradually declining next year. This means the market should slowly return to balance. We are encouraged that recent homebuyers are having exceptionally low default rates,’ he explained.