Washington, DC, November 20, 2006 - Conditions for home buyers improved during the third quarter as existing single-family home prices in many metropolitan areas experienced corrections, and most states saw sales activity below a year ago which helped to build housing inventories, according to the latest quarterly surveys by the National Association of Realtors.
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate1 of 6.27 million units in the third quarter, down 12.7 percent from a 7.18 million-unit pace in the third quarter of 2005 – the second highest level on record, after a peak of 7.19 million in the second quarter of last year. Even with the overall decline, 10 states showed increases in sales activity from a year ago.
Third-quarter metro area single-family home prices, examining changes in 148 metropolitan statistical areas, 2 show 102 areas had price gains, including 21 metros with double-digit annual increases, and 45 areas experiencing price declines; one was unchanged.
David Lereah, NAR’s chief economist, said market conditions are nearly the opposite of a year ago. “Last year we had a record sales market and historically tight supplies of homes with buyers bidding over the asking price,” he said. “With the market in full transition, buyers now have choices and sellers are more willing to negotiate – under these circumstances it’s no surprise that overall home prices are slightly below a year ago. We expect this trend to continue in the months ahead, but we’ll see modest appreciation in most of the country in 2007.”
The national median existing single-family home price was $224,900 in the third quarter, down 1.2 percent from a year earlier when the median price was $227,600. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Pat Vredevoogd Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said the market transition is good news for home buyers. “With the supply of homes at the highest level in over a decade and historically low mortgage interest rates, it’s become a great time to buy a home,” said Combs. “This window of opportunity will continue into the new year, but inventories are starting to decline and sellers will be less willing to negotiate when conditions begin to balance in most areas around early spring.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.56 percent in the third quarter, down from 6.60 percent in the second quarter; the rate was 5.76 percent in the third quarter of 2005. Last week, Freddie Mac reported the 30-year fixed rate was down to 6.24 percent.
The biggest total sales increase was in North Carolina, where existing-home sales rose 9.7 percent from the third quarter of 2005. In Texas the third-quarter resale pace rose 8.6 percent from a year earlier, while Montana experienced the third strongest gain, up 6.4 percent.
The largest single-family home price increase was in the Salem, Ore., area, where the third quarter price of $228,000 was 24.7 percent higher than a year ago. Next was Elmira, N.Y., at $93,600, up 21.4 percent from the third quarter of 2005. The Salt Lake City area, with a third quarter median price of $216,300, increased 19.2 percent in the last year.
Median third-quarter metro area single-family prices ranged from a very affordable $86,000 in both Decatur, Ill., and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly nine times that amount in the San Francisco-Oakland-Fremont area where the median price was $749,400. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $747,400, followed by the Anaheim-Santa Ana-Irvine area (Orange Co., Calif.), at $705,000.
