Broad Price Stabilization and Strong Sales in Second Quarter
by NAR Staff
The trend in firming home prices solidified in the second quarter of 2010. The latest figures from the National Association of REALTORS show more metropolitan areas posted home price increases compared to a year ago. Resales also increased, both from a year ago and from the first quarter of this year.
The national median existing single-family price was $176,900 in the second quarter, up 1.5 percent from $174,200 in the same period of 2009. In the second quarter, 100 of the 155 metropolitan statistical areas tracked by NAR registered higher median existing single-family home prices compared to the second quarter of 2009. Fourteen metros posted double-digit price increases. In the first quarter of this year 91 areas had higher prices, while only 26 MSAs experienced annual price gains in second quarter of 2009.
The median price is influenced by the mix of homes that were sold and does not reflect pure appreciation or depreciation. The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. As more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.
State Existing Home Sales
Total state existing-home sales, including single-family and condos, rose 9.1 percent to a seasonally adjusted annual rate of 5.61 million units in the second quarter – up from 5.14 million units in the first quarter. Resales were 17.3 percent above the 4.78 million-unit pace in the second quarter of 2009. Distressed homes accounted for 32 percent of second quarter sales, down from 36 percent a year ago.
The District of Columbia and 47 states experienced increases in existing-home sales on a year over year basis, driven in part by the home buyer tax credit as well as continued historic low mortgage rates.
Metro area condominium and cooperative prices – covering changes in 55 metro areas – showed the national median existing-condo price was relatively flat at $175,700 in the second quarter, down 0.5 percent from the second quarter of 2009. Twenty-six metros showed increases in the median condo price from a year ago and 29 areas had declines; the first quarter of 2010 showed 24 metros up, while only four metros saw annual price gains in second quarter of 2009.
Existing-home sales rose in the Northeast, Midwest and the South, while median home prices increased in two of the nation's regions – the Midwest and the West – while declining in the South and Northeast.
The median existing single-family home price in the Northeast declined 3.2 percent from a year ago to $238,000. Resales in the region jumped 14.9 percent in the second quarter to a level of 980,000 units and were 23.6 percent above the level in the second quarter of 2009.
In the Midwest, the median existing single-family home price increased to $148,500 from the second quarter of 2009 – up 1.4 percent. Existing-home sales in the Midwest rose 14.5 percent from the first quarter of this year to 1.30 million units -- 20.9 percent above their level in the second quarter of 2009.
In the South, the median existing single-family home price slipped 2.0 percent to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9 percent in the second quarter to an annual rate of 2.10 million and were 18.8 percent above a year ago.
The median existing single-family home price in the West rose 2.6 percent to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6 percent in the second quarter to an annual rate of 1.23 million but were 7.6 percent higher than in the second quarter of 2009.
NAR analysts indicate that the correction in home prices appears to have ended in 2009. So far this year the market has seen relatively flat national home prices, which appear to be supported by market fundamentals. But prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market don’t expect any consequential movement in home prices for the foreseeable future.
Record low mortgage rates are likely to continue, and so will help cushion a slowdown in sales during the summer months. Those low rates, in addition to stable and affordable home prices in most areas, will provide buyers with opportunities to purchase homes, even in the absence of the tax credit program. But there are still concerns about the job market. Job creation will give home buyers more confidence, but the market over the next few months is likely to be below what we would expect for the size of our growing population. As bank balance sheets improve, credit restrictions should also gradually improve.