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Katrina Aftereffects Bolster Existing Home Sales
September’s existing sales of single-family homes, townhomes, condominiums and co-ops remained unchanged from the prior month, holding to a seasonally adjusted annual rate of 7.28 million units, the second highest monthly pace on record, the National Association of Realtors® reported last week.
The robust level of activity was supported by home sales in markets surrounding the areas of devastation from Hurricane Katrina, according to David Lereah, the association’s chief economist.
“We are now getting some hard data from this region, with spot checks showing sharply higher home sales to residents who were displaced by the hurricane. The sales surge is more than offsetting declines in the disaster zone,” Lereah said.
Ad hoc checks in markets such as Baton Rouge, La. show a dramatic rise in existing-home sales compared to a year earlier, he said. Parts of New Orleans recorded only a fraction of their year-earlier volume, but some suburban areas of the city appeared to be doing well.
Echoing observations about a developing trend in new-home sales, Lereah noted that, “The underlying fundamentals of the housing market are solid and sales will stay historically strong, but they will trend modestly down from current peaks. Masked by the data are early signs that housing is starting to wind down from a boom and will transition into an expansion — in other words, a soft landing.”
Lereah added that home prices are expected to continue to appreciate faster than they have in the past “until we see sustained improvements in the supply of homes, and we expect the balance between home buyers and sellers to begin to equalize in the months ahead.”
Single-family home re-sales rose 0.6% to a record seasonally adjusted annual rate of 6.38 million in September, while sales of existing condominiums and co-ops dropped 4.7% to an annual pace of 898,000.
The median single-family existing home price was $212,200 in September, up 14.3% from a year earlier, compared to a median price of $213,600 for a condo, up 9%.
Total housing inventory levels barely budged last month, rising 0.3% to 2.85 million homes, a 4.7-month supply at the current sales pace, the Realtors® reported.
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