Home Prices Up 11 Percent
Home sales dropped a bit over the last month but they remain strong compared to this time last year and price gains remain robust.
NAR Chief Economist Lawrence Yun released NAR’s September 2012 existing-home sales figures on Friday last week, and they’re down 1.7 percent from August figures, to an annual sales pace of 4.75 million units. That’s still 11 percent above where they were last year, suggesting that the long-term upward trend continues.
The upward trend of prices continues as well. The median price, at $183,900, is up a strong 11.3 percent from year-ago levels. Part of that increase stems from the mix of houses being sold today. We’re seeing fewer distressed sales as a percentage of the market, and prices are reflecting that more favorable mix. But Yun said on Friday that the increase is also reflective of genuine price appreciation. Indices that look at price changes of the same assets over time, like Case-Shiller and the Federal Housing Finance Agency price index, are showing similar price increases. So, the gains aren’t just from a change in the mix of homes being sold; they’re also from asset appreciation, Yun said.
Two other notable data points from Friday’s release:
1. Inventory is dropping, so you can expect upward price pressure to continue. The supply of homes available for sale is now at 5.9 months, the first time in a number of years the number has dropped below 6 months. Total inventory stands at 2.32 million units.
2. Time on market has dropped to a median 70 days, with roughly a third of all sales closing in 30 days or so. At this time last year, the median time on market was more than 100 days, so the trend is positive.