Existing Home Sales Increase as Prices Continue to Tumble

May 11, 2011 (Chris Moore)

The spring selling season seems to have finally begun as existing home sales increased by 8.3% in the first quarter of 2011 according to the National Association of Realtors (NAR). Sales gains were experienced in 49 states and the District of Columbia, while median home prices of existing single-family homes continued to decline.

Total existing home sales rose to a seasonally adjusted annual rate of 5.14 million transactions in the first quarter, up from 4.7 million in the fourth quarter of 2010. Sales were only 0.8% below the 5.18 million pace experienced in the same quarter in 2010.

The largest sales increases were recorded in the lower price ranges which have been popular with investors and cash buyers. Selling rates for homes selling for $100,000 or less in the first quarter were 8.9% higher than in the first quarter of 2010. The larger volume of lower priced homes created a downward skew on the overall median price as the national median existing single-family home price fell to $158,700 in the first quarter, down 4.6% from $166,400 from the same quarter a year earlier.

Lawrence Yun, NAR chief economist, said, “The reading of quarterly price data can be volatile because they are based on the types of homes that are sold during the quarter. When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country,” he said. “Annual price data provides a better guide about the direction of the market in those areas.”

Purchases by investors increased to 21 percent of transactions compared to 18 percent a year earlier. Purchases by first time homebuyers decreased to 32 percent of transactions, down from 42 percent the previous year and repeat buyers accounted for 47 percent of purchases, an increase from 40 percent a year earlier. All cash home purchases rose to 33 percent from 27 percent in the first quarter of 2010.

Regionally, existing-home sales in the Northeast increased 0.8 percent in the first quarter to a level of 800,000 but are 7.3 percent below the first quarter of 2010. In the Midwest sales rose 7.9 percent in the first quarter to a pace of 1.09 million but are 5.0 percent below a year ago.

In the South, existing-home sales increased 8.5 percent in the first quarter to an annual rate of 1.96 million and are 2.8 percent higher than the first quarter of 2010 and in the West, sales jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago.

The median existing single-family home price in the Northeast declined 5.0 percent to $234,100 in the first quarter from a year ago, while in the Midwest, prices fell 5.3 percent to $124,400 in the first quarter from the same period in 2010.

In the South, the median existing single-family home price slipped 0.6 percent to $141,800 in the first quarter from a year earlier and in the West, the median price fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.

Tags: National Association of Realtors, NAR, existing home sales, median sales price, single-family home, seasonally adjusted annual rate, investors, first time homebuyers, cash purchases

Source:
NAR