Atlanta Real Estate Blog

The Housing Market In Review

Existing Home Sales - Up 24% from last year

Existing home sales recorded another strong gain in October with many buyers rushing to beat the deadline for the first-time buyer tax credit scheduled to expire at the end of November.  Sales surged 10.1 percent to 6.1 million units over September sales of 5.54 million and are 23.5 percent above the 4.94 million-unit level seen last year.  Sales activity is at the highest level since February 2007 when it reached 6.55 million.

Median Home Price - Very favorable

Low home prices are contributing to extremely favorable affordability conditions.  Existing-home price was $173,100 in October, 5 percent higher from its low in January but still 7.1 percent below October 2008.  Distressed properties, which accounted for 30 percent of all transactions in October, continue to hold down the median home price, as they typically sell for 15 to 20 percent less than traditional homes.

Inventory - Lowest level in more than 2.5 years

“We are getting closer to a general balance between buyers and sellers,” according to Lawrence Yun, NAR chief economist.  The supply of homes is now at the lowest level in more than two and a half years.  Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, representing a seven-month supply at the current sales pace, down from September’s eight-month supply.  Compared to a year ago, there are now 15 percent fewer homes on the market.

Mortgage Rates – Back at 4.78%

Remaining at attractive levels for people looking to buy a home or refinance, historically low interest rates are boosting the market.  Rates for 30-year fixed loans fell to 4.95 percent in October from 5.06 percent the month before.  During the week ended November 25, rates again dropped to the low 4.78 percent reached in the spring.  As the economy enters its recovery phase and concerns over inflation come back, mortgage rates are expected to go up.

Affordability – Best since 1970s

Unprecedented interest rates, low home prices, as well as the first-time buyer tax credit are lifting the housing market.  All these factors combined are “adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970,” according to Lawrence Yun, NAR chief economist.  So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 15 percent.

Sources: National Association of Realtors, Freddie Mac

Tags: Existing Home Sales, Median home price, housing inventory, mortgage rates, housing affordability, National Association of Realtors, Freddie Mac, NAR, inflation, rising mortgage rates, home price-to-income ratio, ATLShortSales.com