Existing-home sales were on the rise during the first quarter of 2011, according to the National Association of Realtors® (NAR).
Lawrence Yun, NAR chief economist, reports, "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."
Regionally, sales increases were seen across the board. The West experienced the biggest rise, jumping 13.5 percent. This took the existing-home sales rate to 2.1 percent above year ago levels.
Following the West's lead was the South, which increased 8.5 percent. The Midwest had the third strongest rise, increasing 7.9 percent, but it was still down 5.0 percent down from last year. And increasing just 0.8 percent was the Northeast, which was down 7.3 percent from the first quarter of 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., feels distressed property sales could be a key to recovery. "The good news is foreclosures, which account for two-thirds of all distressed homes sold, are selling very quickly," he said. "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 home buyers are having exceptionally low default rates."
Median home prices also saw activity in the first quarter. All regions saw price declines, ranging from down 0.6 percent in the South to down 5.3 percent in the Midwest. This is good news for buyers searching for a deal, but unwelcome news for homeowners trying to hold onto equity.
In terms of pricing, the median existing single-family home price is varied. Yun says that "the reading of quarterly price data can 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." He says, "Annual price data provides a better guide about the direction of the market in those areas." Currently we are seeing a range of prices across the nation.
- Northeast: $234,000
- Midwest: $124,000
- South: $141,800
- West: $197,400
Yun notes that "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."
Published: May 11, 2011
