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Genuine and sustained recovery in US home sales, says NAR

Existing home sales, which are completed transactions that include single family, town homes, condominiums and co-ops, increased 4% to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2% above the 3.94 million unit pace in November 2010.

NAR chief economist Lawrence Yun said more people are taking advantage of the buyer’s market.‘Sales reached the highest mark in 10 months and are 34% above the cyclical low point in the middle of 2010. A genuine sustained sales recovery appears to be developing,’ he explained.

‘We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long term plans,’ he added.

NAR president Moe Veissi said housing affordability conditions have set a new record high. ‘With record low mortgage interest rates and bargain home prices, NAR’s housing affordability index shows that a median income family can easily afford a median priced home,’ he explained.

‘With consumer price inflation rising by more than 3% this year, consumers are looking to lock in steady payments by taking out long term fixed rate mortgages. However, the problem remains that some financially qualified families who are willing to stay well within their means are being denied the opportunity to buy in today’s market by the overly restrictive mortgage underwriting situation,’ Veissi added.

An elevated level of contract failures continues to hold back a broader sales recovery. Contract failures were reported by 33% of NAR members in November, unchanged from October but notably above a year ago when it was 9%.

Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including lower conforming mortgage loan limits, home inspections and employment losses.

Total housing inventory at the end of November fell 5.8% to 2.58 million existing homes available for sale, which represents a seven month supply at the current sales pace, down from a 7.7 month supply in October.
‘Since setting a record of 4.04 million in July 2007, inventories have trended down and supplies are moving close to price stabilization levels,’ Yun said.

The national median existing-home price for all housing types was $164,200 in November, down 3.5% from a year ago. Distressed homes, that is foreclosures and short sales typically sold at deep discounts, accounted for 29% of sales in November of which 19% were foreclosures and 10% were short sales, compared with 28% in October and 33% in November 2010.

All cash sales accounted for 28% of purchases in November compared with 29% in October and 31% in November 2010. Investors make up the bulk of cash transactions and bought 19% of homes in November, little changed from 18% in October and 19% in November 2010. First time buyers accounted for 35% of transactions in November, up from 34% in October and 32% in November 2010.

Single family home sales rose 4.5% to a seasonally adjusted annual rate of 3.95 million in November from 3.78 million in October, and are 12.9% above the 3.5 million unit level in November 2010. The median existing single family home price was $164,100 in November, down 4% from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 470,000 in November and are 6.8% higher than the 440,000 unit pace a year ago. The median existing condo price was $164,600 in November, which is 0.2% below November 2010.

Regionally, existing home sales in the Northeast jumped 9.8% to an annual pace of 560,000 in November and are 7.7% above a year ago. The median price in the Northeast was $240,200, which is 0.1% below November 2010.
Existing home sales in the Midwest rose 4.3% in November to a level of 960,000 and are 15.7% higher than November 2010. The median price in the Midwest was $133,400, down 4% from a year ago.

In the South, existing home sales increased 2.4% to an annual pace of 1.74 million in November and are 12.3% above a year ago. The median price in the South was $143,300, which is 2.1% below November 2010.

Existing home sales in the West rose 3.6% to an annual level of 1.16 million in November and are 11.5% higher than November 2010. The median price in the West was $195,300, down 8.4% on a year ago.