Survey shows prices, sales activity improving in existing-home market

The National Association of Realtors reported strong gains in existing-home sales as well as rising prices in many metro areas during the fourth quarter of 2009.

The NAR’s latest surveys showed that sales increased from the third quarter of 2009 to the fourth in 48 states and the District of Columbia, with 32 states experiencing double-digit gains. And all but three states saw double-digit annual increases.

Total national existing-home sales, including single-family and condos, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008. Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier, according to the NAR.

Colorado saw an increase in sales of existing homes including single-family, condos and co-ops of 15.1 percent from the third quarter to the fourth, and a 10.3 percent increase from the fourth quarter of 2008 to the fourth quarter of last year.

Lawrence Yun, NAR chief economist, says the first-time home buyer tax credit was the dominant factor in the upswing.

“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he says. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter only 30 MSAs showed annual price increases and 123 areas were down.

In Colorado, Boulder saw a 3.2 percent year-over-year increase, while Colorado Springs prices increased 1.5 percent and Denver-Aurora’s 11.2 percent.

The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun says.

“Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable,” he says.