Conventional financing restrictions and a sluggish economy continue to deter many potential home buyers. But as inventory shrinks and prices tick upward, more and more experts agree: the tide seems to be turning.
Recent data from the housing market adds to evidence that the real estate recovery is underway. Existing home sales and prices are rising, and new home sales are up, according to recent reports from the National Association of Realtors (NAR) and the Department of Commerce.
Existing home sales climbed in the third quarter of 2012 to a seasonally adjusted rate of 4.86 million, according to the NAR report. That’s a 10 percent increase from the same period in 2011.
“Low mortgage rates are encouraging many buyers who were on the sidelines,” NAR president Moe Veissi said in a press release. “Sales this year are notably higher than the levels seen in 2008 through 2011.”
Existing home prices are also increasing. The median price for an existing single-family home was $186,000 in the third quarter of 2012, up about 7.6 percent from $173,000 in the third quarter of 2011.
“Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “All in all, we are more optimistic about housing.”
Even new home sales are rising, says the Department of Commerce. The pace of new home sales rose 5.7 percent from August to September, settling at a seasonally adjusted annual rate of 389,000 units.
The year-to-year comparison is even more dramatic. Sales of new homes have climbed 27.1 percent from September, 2011 to September, 2012.
“September’s rise in new home sales is another sign that home buyers are becoming more willing and more able to splash out on a new home,” said Paul Diggle, an economist with Capital Economics.
Coming off a record increase in August, new home prices fell moderately in September. The median price of a new home in September was $242,400, down from $250,400 in August, according to the Commerce Department.
The September new home price is still a substantial increase from last year’s figure. New home prices have risen 11.5 percent from Sept. 2011 to Sept. 2012.
“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” said NAR chief economist Lawrence Yun. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest.”
Despite a flurry of positive trends, the housing market recovery is anything but complete. Strict lending standards, a tepid economy and underwater mortgages continue to limit a full-steam resurgence.
“There are positive signs, the problem is that it’s not a really ‘strong’ positive sign yet,” said Robert Shiller, Yale professor and co-creator of the S&P/Case-Shiller index of property values. “It is not a resounding recovery.”