Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.

Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.

Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”

Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said.

Conditions for First-Time Buyers
Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers,shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.

NAR President Charles McMillan said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average.”

Inventory Falls
Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.

“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.

Home Sales Breakdown
The national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7 percent above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1 percent below a year ago.

Existing condominium and co-op sales jumped 9.7 percent to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7 percent above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7 percent from September 2008.

Here’s the region-by-region picture:

• Northeast: Existing-home sales increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price was $234,700, down 7.0 percent from a year ago.
• Midwest: Existing-home sales jumped 9.6 percent in September to a pace of 1.25 million and are 7.8 percent above a year ago. The median price was $147,600, which is 1.0 percent below September 2008.
• South: Existing-home sales rose 9.0 percent to an annual level of 2.06 million in September and are 10.8 percent higher than September 2008. The median price was $153,500, down 7.6 percent from a year ago.
• West: Existing-home sales surged 13.0 percent to an annual rate of 1.30 million in September and are 5.7 percent above a year ago. The median price in the West was $219,000, which is 15.0 percent below September 2008.

     First-time homebuyers continue to drive the real estate market to the benefit of trade-up or repeat buyers. As discussed earlier, this increased activity appears to be a direct response to the $8,000 first-time buyer tax credit. In April, first-time buyers accounted for 40% of all home sales and the trend is expected to spur more activity in the coming months. According the Lawrence Yun, NAR chief economist, “Since first-time buyers must finalize their purchase by November 30, 2009, to get the credit, we expect greater activity in the months aheead, and that should spark more sales by repeat buyers.”
A recent change this month allows qualified first-time home buyers to use the tax credit to help pay closing costs on FHA loans, to buy down the interest rate or make a larger down payment.
Existing home sales rose for the third straight month, building on gains in the previous two months. More repeat home buyers are entering the market indicating rising confidence in the market conditions. Home prices edged up 0.2% over the previous month, adding increasing signs for market stabilization. In spite of this, home prices are still lower than the same time a year ago. Foreclosures and short sales, which accounted for 45% of April sales, continue to skew the median price downword, as these properties are sold at a larger discount in comparison to traditional sales. Distressed sales, however, are helping the makret trim off considerable stock of unsold homes in areas with large inventory overhangs. There are currently on 183 foreclosures on the market in Fairfax County, down considerable from previous months.
THIS MONTH IN REAL ESTATE VIDEO

Last night (Apr 28th) was the third in our series of charity nights at the Old Brogue in Great Falls.  We had approximately 25 people attend, despite the Capitals playing in game seven of the playoff series with the New York Rangers.  In addition to the 20 percent donation going to the Susan G. Komen foundation, we raised additional money by having folks purchase extra chances for the two door prizes.  I of course have to thank Mike Kearney (owner of the Brogue) for contributing 10 percent of everyone’s dinner to the charity.  We also had great prizes donated by Michele Cornejo of Toll Brothers and Paul and Connie Sawtell of Dominion Title in Great Falls.  The Toll Brother gift of a crystal bowl from Tiffany’s was won by Frank Barlow.  I’m sure Linda will put it to great use.  The wonderful gift basket went to Susan and Jim Cassell of Great Falls Design Build.  Hope they enjoy all the goodies.  We only ask that if you are thinking about purchasing a new home, consider Toll Brothers and of course schedule your settlement with Dominion Title.

Next month’s event will take place on Tuesday May 26th.  Proceeds from this event will go towards supporting the American Diabetes Association.  As of today, we have one door prize of a bottle of Casa Noble tequila.  This coming from our good friend Otto Hoernig.  Please feel free to call or drop an e-mail if you would like to make a donation as well.  More importantly, we hope to see you there on the 26th.  If you plan to attend drop me an e-mail so that we can keep track of how much room to reserve.

This month’s charity night at the Pub in Great Falls will be in support of the Susan G. Komen Fund for the Cure. The decision to choose this particular charity was in direct response to a request by the renowned reconstructive surgeon and our good friend Dr. Jane Hanscom.   Jane was actually featured on NBC’s Today show back in 1999 as a breast cancer surgeon who was also a cancer survivor.  Nancy and I are particularly thankful for the support Jane provided when Nancy had to undergo her neck cancer treatments.  As always, the event will take place on the last Tuesday of the month (April 28th) at the Pub.  We will begin at approximately 7:00 PM.  Please be sure to ask that you are seated with our group.  Simply print out the coupon and bring it with you to insure that the fund is credited.