Existing home sales in the United States rose by 5.9% last month are now at their highest level since November 2009, according to the National Association of Realtors. Total sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, are now 14.5% higher than a year ago.
The national median existing home price for all housing types was $180,600, up 10.1% from November 2011, the ninth consecutive monthly year on year price gain, which last occurred from September 2005 to May 2006. Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 22% of November sales of which 12% were foreclosures and 10% were short sales, down from 24% in October and 29% in November 2011.
Foreclosures sold for an average discount of 20% below market value in November, while short sales were discounted by 16%. Lawrence Yun , NAR chief economist, believes that there is healthy market demand. ‘Momentum continues to build in the housing market from growing jobs and a bursting out of household formation, he said, adding, ‘With lower rental vacancy rates and rising rents, combined with still historically favourable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas’. He also suggested that the market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages.
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Total housing inventory at the end of November fell 3.8% to 2.03 million existing homes available for sale, which represents a 4.8-month supply at the current sales pace, down from 5.3 months in October, and is the lowest housing supply since September of 2005 when it was 4.6 months. Listed inventory is 22.5% below a year ago when there was a 7.1 month supply while raw unsold inventory is now at the lowest level since December 2001 when there were 1.89 million homes on the market.
NAR President Gary Thomas said that there has been speculation of a rise in short sales before the end of the year with pending expiration of the Mortgage Forgiveness Debt Relief Act but this has not materialsed. ‘The fact remains it is extremely difficult to expedite a short sale, and banks’ response to client urgency is only starting to improve. However, we’re hopeful that the act will be extended before it expires on December 31 so sellers don’t have to pay taxes on forgiven mortgage debt, which would be unfairly treated as income for owners who are selling under duress,’ Thomas said.
Existing home sales in the Northeast rose 6.9% in November and are 14.8% above a year ago – the median price was $232,900, down 2% year on year. While home sales in the Midwest increased 7.2% and are 21.4% higher than a year ago with a median price in the Midwest of $141,600, which is 7% above November 2011. In the South, existing home sales rose 7.9% and are 17.2% above November 2011 with a rise in the median price to $157,400, up 10.5% from a year ago. Home sales in the West rose 0.8% and are 4.4% higher than a year ago although with ongoing inventory constraints, the median price in the West was $248,300, which is 23.9% above November 2011.