Single Family Housing Market Stabilizing

Washington, DC, May 9, 2012 -- Median existing single-family home prices are firming in many metropolitan areas, while improving sales and declining inventory are creating more balanced conditions, according to the latest quarterly report by the National Association of Realtors.

The median existing single-family home price rose in 74 out of 146 metropolitan statistical areas based on closings in the first quarter from the same quarter in 2011, while 72 areas had price declines.

In the fourth quarter of 2011 only 29 areas were showing gains from a year earlier.

Lawrence Yun, NAR chief economist, said there is some volatility in the price performance.

“Home prices are more volatile than normal because of sudden upswings in buyer activity in some localities, and also are affected by the prevalence of distressed sales,” he said.

“Home prices lag sales activity because the transactions were negotiated mostly in the previous quarter.  Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future.”

Yun said a big part of the story is housing inventory.  “We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges.  This is good news for many sellers who wish to list now, or for those waiting for prices to improve.”

At the end of the first quarter there were 2.37 million existing homes available for sale, which is 21.8% below the close of the first quarter of 2011 when there were 3.03 million homes on the market.  There has been a sustained downtrend since inventories set a record of 4.04 million in the summer of 2007.

The national median existing single-family home price was $158,100 in the first quarter, which is 0.4% below $158,700 in the first quarter of 2011.

Distressed homes – foreclosures and short sales which sold at deep discounts – accounted for 32% of first quarter sales; they were 38% a year ago.

Total existing-home sales, including single-family and condo, increased 4.7% to a seasonally adjusted annual rate of 4.57 million in the first quarter from a downwardly revised 4.37 million in the fourth quarter, and were 5.3% above the 4.34 million level during the first quarter of 2011 when sales spiked.

“This is the highest first quarter sales pace since 2007,” Yun said.  “With strong market fundamentals, total home sales this year should rise 7 to 10%.”

First-time buyers purchased 33% of homes in the fourth quarter.

The share of all-cash home purchases in the first quarter was 32%, up from 29% in the fourth quarter.

Investors accounted for 22% of all transactions in the first quarter, up from 19% in the fourth quarter; they were 21% a year ago.