A new report shows a slowly healing housing market, over its darkest days but not yet completely healthy. Existing home sales– the biggest chunk of the housing market–came in as expected at a seasonally adjusted annual rate of 4.75 million in September, according to the National Association of Realtors.
There are some encouraging signs in today’s report. Though sales fell 1.7 percent in September compared with a month earlier, they are still up 11 percent over a year ago. Sales are affected because getting a loan remains difficult, many homeowners owe more on their home than it’s worth and there’s too tight of a supply of homes for sale.
Housing is an important part of the economy. People feel more confident about their finances if their home, often their biggest investment increases in value.
Home prices are going up at a pre-recession pace. The national median existing-home price was $183,900 in September, up 11.3 percent from a year ago. The last time there were seven consecutive monthly year-over-year increases was from November 2005 to May 2006. Prices are going up in part because there is a shortage of homes for sale in many areas.
There is now a 5.9 month supply of homes available for sale, down from a six- month supply in August. This is the lowest inventory since March 2006.
At its worst there was more than a year’s supply of homes for sale.
If the recovery remains on the track there will be demand for new homes. We saw in data earlier this week that home builders are more confident and planning to increae construction in coming months.