Home sales increase in October

Home sales increase in October

Federal Savings Bank

November, 2012

According to the National Association of Realtors, sales of existing home increased during October despite the damage caused by Hurricane Sandy, which ripped across the east coast and damaged thousands of homes.

Total existing-home sales are completed transactions that include single-family homes, townhomes, condominiums and co-ops. Existing home sales increased by 2.1 percent to a seasonally adjusted annual rate of 4.79 million during October from a downwardly revised 4.69 million in September.

In addition, existing-home sales are 10.9 percent above the 4.32 million-unit level in October 2011.

"Home sales continue to trend up and most October transactions were completed by the time the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country," said Lawrence Yun, NAR chief economist. "We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions."

While existing-home sales increased during October, the national median home price for all housing types increased to $178,600 in October, which was an 11.1 percent increase compared to the same time last year. The increase in median home price marked the eighth consecutive monthly year-over-year increase, which hasn't been experienced since October 2005 to May 2006.

"Inflationary pressures are expected to build during the next two years," said NAR President Gary Thomas. "As a result, mortgage interest rates will also rise with inflation. Buyers who are currently held back by tight mortgage credit standards should work to improve their credit scores so they'll be able to qualify for a mortgage while conditions are still favorable."

Distressed homes, which include foreclosures and short sales that were sold at deep discounts, accounted for 24 percent of October sales. Twelve percent of the distressed homes sold were from foreclosures and the other 12 percent was from short sales. Foreclosures sold at an average discount of 20 percent below market value during October while short sales were discounted by 14 percent.

According to Freddie Mac, the national average commitment rate for a 30-year fixed-rate mortgage decreased to 3.38 percent in October from 3.47 percent in September.

Green building is also becoming more popular amongst Americans, which might encourage more first-time home buyers to secure a home that reduces their carbon footprint on the environment.

Tagged As : First Time Homebuyers