This year sales of existing homes could exceed five million, a barrier broken only once since the housing markets crashed in 2007.
Monday the National Association of Realtors reported that, with just two months to go in the year, homes are selling at a rate just a few thousand units shy of 5 million.
Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 1.4 percent to a seasonally adjusted annual rate of 4.97 million in October from a downwardly revised 4.90 million in September, and are 13.5 percent above the 4.38 million unit level in October 2010.
The results shocked the experts. S&P said the October sales results were much stronger than expected. S&P analysts had expected the annualized rate to fall to just 4.95 million. Economists polled by Briefing.com had expected an annual rate of 4.85 million homes in October. Bloomberg polled 75 economists whose consensus was an annual rate of 4.80 sales.
Even more remarkable is the progress than has been achieved since October, 2010 when the markets were still suffering from the slump caused by the “buy forward” effect that the expiration of the tax credit had on demand. Since that month the rate of existing home sales has jumped 13.5 percent from 4.38 million units.
Lawrence Yun, NAR chief economist, said the market has been fairly steady but at a lower than desired level. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process.”
In 2009, when the initial first time homebuyer was in effect and its expiration in the fourth quarter of the year spurred a flurry of sales, sales topped 5 million. However, the simulative effects of the tax credit are long past, suggesting that the current improvement is the result of organic growth, not taxpayer-finance stimulus.
Sales in 2007 reached 5.65 million but they were on the decline, falling 12.8 percent, the largest drop since 1982. The previous year, 2006, saw the peak of the housing boom as 6,478,000 homes were sold.