Pending home sales are up sharply
... according to data released today by the National Association of Realtors (NAR). But as always, let's take a look at what's behind the statistics and how the Charleston real estate market is doing.
The NAR said that the pending home index rose to its highest level since June 2007. Buyers are apparently reacting positively to lower home prices and affordable mortgage rates. The highest levels of activity, however, were in California, Nevada, Arizona and Florida. Since these states are the foreclosure capitals of America, it's likely that prices were very attractive to buyers.
So as prices declined (red line), sales increased (blue line).
In fact, I heard on CNBC this morning that approximately 50% of all the sales in those states were foreclosures so you can expect the Case-Shiller home prices to once again drop sharply because of the weight that those housing markets have in the index.
Lawrence Yun, chief economist for the NAR said, "It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales."
But I am not hearing of any problems with qualified buyers obtaining mortgages despite the headline grabbing credit crisis so I'm hopeful too.
Now, what's happening in the Charleston housing market. It's too early to really report the September sales because as regular readers will note, the agents don't enter the sold data in a very timely manner. I wait until almost 30 days after the month ends to gather the data for the Charleston real estate market report and there are still additional sales still being posted several months later. (Every once in a while, I even go back and add the newly entered data into the spreadsheets for the sake of accuracy.)
So having said that, I took a look at the September unit sales and they are down by 32.7%, the median price declined by 5.4% and the average price declined by 10.4% from September 2007. For comparisons sake, August unit sales were down by 34.4% and the median price declined by 6.0% and the average price declined by 9.1% from the August 2007. When comparing the most recent 12 month period to the previous 12 month period, unit sales declined by 29.7% while prices remained mostly flat, down 0.8% on a median basis and down 0.5% on an average basis.
But it seems that home prices in Charleston are getting a little more affordable despite the fact that we don't have anywhere near the number of foreclosures that the above mentioned housing markets have. And of course, there is pricing pressure with lots of inventory available. And here is another interesting statistic, sales averaged 5% less than list price (and the list price may have previously been reduced before the property went under contract).
The bottom line, home sales will increase as affordability improves.
Read the NAR press release.