Sales Up Prices Down
This same story has been playing our for quite a while now. The trend towards lower prices will probably continue even as the recession winds down. Continuing job loss, a weak recovery and real problems in all real estate sectors, now focused on commercial property and Alt A high end homes, should keep a lid on prices. That said people are beginning to feel good again, or at least less wary. They are stepping out and buying homes and that is a good good sign. see chart here

Existing-Home Sales Surge While Price Moderate

Most states saw rising existing-home sales in the third quarter, with price declines in many metro areas, according to the latest survey by the National Association of Realtors.

NAR reports that total state existing-home sales of single-family and condos, increased 11.4 percent and are now 5.9 percent higher than the third quarter of 2008. Sales increased in 45 states and 28 states saw double-digit gains. Year over year sales were higher in 32 states and D.C. Buyers are coming back and in some parts of California we are seeing multiple bids and homes selling for more than list.

During the third quarter, 123 out of 153 metropolitan statistical areas, 2 reported lower median existing single-family home prices while 30 areas had price gains

NAR chief economist,Lawrence Yun spoke of the the tax credit. He goes on to say: We cant underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector. Its given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.

The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market, Yun said.

Soaking up supply

Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures. To be sure the numbers are mixed and some areas are experiencing reversals, but over all we are beginning to pull ourselves up out of this slump. As long as we continue to see a Fed willing to support the markets until they are strong enough to stand on their own, we should be able top avoid a double dip. Encouraging was to hear the G20 come out with a continuation of supports. This recovery is still in the hands of policy makers.

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