October Market in Review - Sure is Better Than Last October

After a few pretty tense weeks, REALTORS® succeeded in getting Congress and President Obama to do the right thing on behalf of American homebuyers.

On Friday, November 6, The Home buyer Tax Credit was extended to April 30, 2010 and expanded to include current homeowners (with certain qualifications; see Nov. 5 post for details).

No wonder then, that October sales numbers were strong.

Sales in October were up 7% over September and up a whopping 45% over October ’08. But, to be fair to the memory challenged among us, Oct. ’08 was the month when the consumer confidence was at its lowest; the stock market was crashing and pundits predicted we were entering the next Great Depression.

Month over month sales in ’09 have now been up for 9 out of 10 months. Total sales are up more than 200% from January of this year.

Median price declined from $165,000 to $155,000 in October. Digging into this number a little deeper reveals a couple of interesting points. Existing homes are tenaciously holding on to their value – declining only $2,000 from September to $160,000. At the same time new homes median dropped from $168,990 to $147,390. This is the first time that news homes median has been less than the median for existing homes. There are likely several reasons for such a decline; higher foreclosure and short sales, deep discounting and the trend in new construction is for homes in the lower price range.

Inventory fell to its lowest number since May ’06. Our highest inventory number was 5198 in July ’07. We are nearly one-third less than that record amount. Compared to October ’08 we are 25% less. Translating that into months of inventory on hand; we are at less than 7 months. (combined new and resale). This is 50% reduction from January ’09.We have traditionally defined “market equilibrium” as 6 months of available inventory. In October we are at 6.3 months overall.

Measuring the impact of the first time home buyer tax credit; NAR recently reported that the Tax Credit will result in an additional 1million sales this year. In Ada County, sales of homes under $160,000 account for almost 40% of all sales. This is up 12% from January ’09.In this price category, inventory is even scarcer. Inventory of new homes under $160,000 is at 5 months. Inventory of existing homes under $160,000 is at 4.6 months.Short sales in October were 14% of all sales; down slightly form September. REO sales in October increased to 22%; up 4% from September.

Pending sales continue to forecast a solid future. At the end of September there were 876 pending sales. This is down by about 7% from September.In theory, the expansion of the Tax Credit to current homeowners should enable more move-up buyers.

NAR ‘s Chief Economist, Lawrence Yun told us last month that, because of the incredible affordability and continued low interest rates there are now 5 million more renters that qualify to buy than there were in 2000.

The Tax Credit expires at the end of April…for real this time. Spring will come quickly.