Existing Home Sales Provide Burst of Encouragement
Right at the moment when the U.S. real estate market seemed headed steadily deeper into gloom, the National Association of Retailers reported that sales of existing homes in August rose almost 19% over August 2010.
Existing home sales include single family homes, town homes, condominiums and co-ops. The NAR had reported a drop in July.
The NAR was sure to mention things like delayed sales which happened to close in August as part of the reason for the improved numbers, but also suggested market fundamentals are improving.
“Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” said Lawrence YUN, NAR chief economist. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”
The association reported that investors increased their percentage of buying activity in August, moving up from being part of 18% of sales in July to 22% in August.
They made up 21% of sales in August 2009. First-time home buyers made up about 32% of the sales, the same number as in July and about the same number as last August, the association said.
An association executive appeared to endorse the notion of more credit unions getting involved in mortgage activity, citing the difficulty in getting mortgage loans as one of the biggest obstacles home sales face.
“The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors can often give buyers advice to help them overcome some of the financing obstacles,” said NAR President Ron Phipps.
A full 18% of NAR member Realtors reporting having had real estate contracts fail to close in August because of declined mortgage applications or failures in loan underwriting or from appraised values coming in below the negotiated price.