Tuesday, May 3, 2011

Real Estate Outlook: Sales Across the Nation

It's all about sales this week, with the most recent reports coming out on existing-home, new home, and pending home sales.

According to the National Association of Realtors® (NAR), existing-home sales rose in March, up 3.7 percent. The NAR expects existing-home sale to rise around 5 to 10 percent this year, thanks to high levels of affordability, rising rent costs, and job growth.

In new homes, a segment of the market that took a big hit during the recession, sales were up a healthy 11.1 percent in March.

National Association of Home Builders' Chief Economist, David Crowe, reports, "The March pace of new-home sales more accurately reflects current market conditions than the extremely low pace we saw in the first two months of this year, when unusually poor weather likely kept buyers away. That said, the average sales pace for the first quarter of 2011 held at about the same level seen for the last half of 2010. A limiting factor is the extremely thin inventory of new homes for sale, which is now at its second-lowest level in history. Builders continue to confront major challenges in obtaining financing to build new homes, and the shortage of new product makes it that much tougher for them to compete with existing homes on the market. At the same time, tighter lending conditions are making it more difficult for qualified buyers to obtain a mortgage."
Regionally, all areas except the South saw a rise in sales of newly built homes. The Northeast led the way with a 66.7 percent gain. The West posted a distant second at a 25.9 percent gain, and the Midwest saw a still impressive rise of 12.9 percent.

The inventory of new homes for sale fell to 183,000 units in March, which is the second-lowest level on record. This represents a 7.3-month supply at the current sales pace.

Pending home sales were also on the rise. After an uneven recovery the past nine months, the NAR's Pending Home Sales Index saw contract signings rise 5.1 percent. This is still down over 11 percent from March 2010.

Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

Regionally, all regions except the Northeast saw rises, though every region is still below last year's levels. Most are between 10 and 20 percent below March 2010 levels.

The largest increase month over month was seen in the South, rising 10.3 percent.

Continued strides in the job market and economy will help to foster more growth in the housing sector. If recession recovery continues, the housing market should continue to post gains in the months ahead.

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