The tax credit and lower home prices seem to be bringing in homebuyers across the country. The National Association of Realtors (NAR) reported today that existing home sales bounced up a record 10.1% from September to October 2009. In October, home sales came in at an annual pace 6.1 million units. It is the strongest pace since February 2007, and 23.5% higher than a year ago.
The NAR credits the jump to many buyers rushing to beat the tax credit deadline. That first-time homebuyer tax credit was set to expire on November 30, 2009. The President just signed an extension and expansion of the credit earlier this month.
The biggest factor in the jump in demand may be price. Home prices across the country continued to correct in October, although at a slower pace than seen. The median existing home price was down 7.1% from October 2008 to settle at 173,100. Those prices have “affordability conditions this year at the highest on record, dating back to 1970,” according to NAR Chief Economist Lawrence Yun.
While most of the northwest is still not matching the positive gains seen in the rest of the nation, prices here are beginning to compel buyers in all price segments to act. (See our September 10, 2009 post entitled Washington vs. the U.S., where we examine why our market’s news will not match the national picture.)
Locally, home sales are still below year ago levels, but the gap is closing. In October, there were 280 home sales compared to 297 in October 2008. Through the first three quarters of the year, sales are off 10.7% compared to the same period last year. This is a big improvement since the start of the year when sales year off 21.5% through the first quarter.
Local pending home sales, those under contract but not yet closed, have bested 2008 numbers for six straight months. The reason for the gap between pending and closed sales has to do with bank approval of short sales. Most short sales are still not approved by the banks causing many contracts to fall apart before closing.
Even with fewer closed sales, our market’s supply demand balance is better than the rest of the nation. Locally, we have a 6.5 month supply of homes for sale, which is down from its peak of 8 months earlier this year.
Despite the good news nationally, supply is still higher than Thurston County. However, at just a 7 month supply, inventory is the lowest it has been since early 2007. There was nearly an 11.5 month supply at the beginning of 2008.
Click image to enlarge.
Both the local and national numbers are trending back toward a balanced market, which will be achieved at a six month supply. Given the local market factors, we expect median prices in our market to continue correct marginally through the spring of 2010 and then begin a steady but slow recovery.
Buyers are out there ready to act, armed with an expanded home buyer credit and interest rates that are the third lowest on records dating back to the early 1970s. When they see well priced homes today, they are acting quickly. As more sellers price to today’s market conditions, we will see inventory come into balance and the market return to our more sustainable patterns of growth.
Statistics compiled by Coldwell Banker Evergreen Olympic Realty, Inc. from the NWMLS database. Statistics not compiled or published by NWMLS.
Though many different stories exist, the most familiar is the story of the first Thanksgiving that took place in Plymouth Colony, in present-day Massachusetts, in 1621. More than 200 years later, President Abraham Lincoln declared the final Thursday in November as a national day of thanksgiving. Congress finally made Thanksgiving Day an official national holiday in 1941.
