While it’s the local housing market that you really need to “plug in” to, it’s worth keeping an eye on the broader market trends as well.
The National Association of Realtors said Tuesday that [U.S.] existing home sales edged up 0.5 percent to a seasonally adjusted annual rate of 6.24 million last month. It was the first increase after seven consecutive monthly declines.
However, the median price for a home sold dropped to $221,000 in October, a decline of 3.5 percent from a year ago. That was the biggest year-over-year price decline on record.
It marked the third straight month that median prices have fallen compared with the same period a year ago, the longest stretch of such declines on record. The median is the point where half the homes sold for more and half for less.
David Lereah, chief economist for the Realtors, said he expected home prices to continue falling for the rest of the year as sellers, accustomed to the booming market conditions of previous years, reluctantly cut their prices.
“Many buyers remain on the sidelines,” Lereah said. “After a period of price adjustment, we’ll see more confidence in the market and a lift to home sales should be apparent in the first quarter of 2007.”
It’s also worth noting that U.S. housing inventory is up 34.4% as compared to October 2005 which puts “months of available supply” at 7.4 (up 51% year over year).
And we have to wonder, will falling home prices actually buoy buyer confidence? While a downward price trend might aid in affordability, we can’t imagine it will inspire too much near-term confidence in terms of housing as an “investment.”
∙ Existing Home Sales Rise, Prices Fall [SFGate]
∙ Existing Home Sales Rise in October, Market Stabilizing [realtor.org]