| Falling prices lead to increased home buying |
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| Written by Becky | |
| Tuesday, 27 January 2009 | |
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The National Association of Realtors has reported that the amount of existing homes sold in December had a substantial increase, rising 6.5% from November, hitting an annualized seasonally-adjusted rate of 4.74 million units. This is still 3.5% short of December´s figures in 2007, but any progress is progress. A senior economist with PNC financial services, Robert Dye, remarked that "We have some months to go before we are out of the woods on the housing front," due to, weak consumer confidence and ongoing rapid deterioration in labor markets." To date the lowest amount of homes sold per year was in 1997 with a low number of 4,371,000. In 2007 5,652,000 existing homes were sold and for 2008 the figure totaled was 4,912,000. Part of the reason why there is a slight increase now is due to bargain hunters. In 2007, the median existing home price was at $207,000, with 2008´s total ranging 15.3% less at $175,400. Real estate and interest rate analyst with Weiss Research, Mike Larson, summed it up accurately, saying "Americans love a bargain, and the housing market is no exception," Larson also remarked that this is "exactly what we need to see if the housing market is ever going to get back to a state of equilibrium,". With more bargain hunters buying, the amount of homes sitting on the market lowered 11.7% in December, banking at 3.68 million. This sales rhythm equates to a 9.3 month inventory supply, much better then the 11.2 registered in November.
Home prices have lowered due to the big amount of distressed sales occurring in the market, accounting for 45% of all transactions completed in December. NAR chief economist Lawrence Yun, wrote that "The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal, balanced conditions," Due to the falling prices, "Buyers will continue to have an edge over sellers for the foreseeable future." Besides that, the market overall will continue to suffer due to the injured job market. Larson commented on this factor as well, "It's hard to imagine a lasting turn in the housing market with thousands of layoffs being announced every few days,". Yun has hope in the Obama administration, which is currently working on an economic recovery plan. Yun stated that, "The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery,".
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