Another Sales Spike But Prices Down.OverView

Existing-home sales – including single-family, townhomes,
condominiums and co-ops – rose 7.2 percent to a seasonally
adjusted annual rate of 5.24 million units in July from a
level of 4.89 million in June, and are 5.0 percent above the
4.99 million-unit pace in July 2008. The last time sales rose
for four consecutive months was in June 2004, and the last time
sales were higher than a year earlier was November 2005.

Lawrence Yun, NAR chief economist, said he is encouraged. “The
housing market has decisively turned for the better. A
combination of first-time buyers taking advantage of the housing
stimulus tax credit and greatly improved affordability conditions
are contributing to higher sales,” he said.

Total housing inventory at the end of July rose 7.3 percent to
4.09 million existing homes available for sale, which represents a
9.4-month supply at the current sales pace, which was unchanged from
June because of the strong sales gain. Raw inventory totals are
10.6 percent lower than a year ago when the number of unsold homes
was at a record.

The national median existing-home price for all housing types was
$178,400 in July, which is 15.1 percent lower than July 2008.

In new sales there were also month-to-month increases in activity but
decreases from a year ago. Sales of new one-family houses in July 2009
were at a seasonally adjusted annual rate of 433,000, according to
estimates released jointly August 26th by the U.S. Census Bureau and
the Department of Housing and Urban Development. This is 9.6
percent (±13.4%) above the revised June rate of 395,000, but is 13.4
percent (±12.9%) below the July 2008 estimate of 500,000.
The median sales price of new houses sold in July 2009 was $210,100;
the average sales price was $269,200. The seasonally adjusted estimate
of new houses for sale at the end of July was 271,000. This represents
a supply of 7.5 months at the current sales rate.

There are several pieces of good news in these reports. The decline
in sales actvitydefinitely has stopped for at least the last several
months. In addition, total inventory in both resale and new homes
is slowly declining. Finally, prices are still dropping (good news
for buyers) but there is a good deal of analysis that points to a potential
bottom--whether temporary or more permanent--in the current environment.