Rising property sales in US will help revive economy

The number of existing properties being sold in the US is rising, with a rise of 3.8% in the second quarter of this year one of the most encouraging signs that a real estate recovery is on its way.

According to the latest figures issued by the National Association of Realtors the quarterly rise pushes the seasonally adjusted annual rate to 4.76 million units up from 4.58 million units in the first quarter of 2009, although it also points out that median prices remain well below last year's levels.

Low interest rates combined with higher affordability as prices decline, will continue to drive sales, which present a 'hopeful sign' to the broader economy, said Lawrence Yun, NAR's chief economist.

He also points out that each property sale adds $63,000 into the economy in terms of related goods and services, underlining the importance of the real estate market in terms of helping to revive the US economy.

'It is the housing engine that traditionally pulls us out of recession. Also sales are drawing down inventory and that will help stabilize home values which in turn will lessen foreclosure pressure and boost credit availability for other sectors of the economy,' he added.

Foreclosures and short sales accounted for 36% of transactions in the second quarter of 2009 and this weighed down median prices, NAR said. Foreclosures tend to sell at 15% to 20% below non-distressed sales.

Median single-family prices across the US ranged from $55,700 in the Saginaw-Saginaw Township North area of Michigan to $569,500 in Honolulu during the second quarter of 2009.

The median price in the Northeast slipped 9.7% to $246,000 from the year-ago quarter, while the median price in the Midwest slipped 8.6% from last year. The South saw a 10.3% dive from last year's median price, and the West plummeted 26.6%.