Housing Market Bounce Back
The sale of new homes rose in June faster than any other month in the last 8 years. As buyers took advantage of the very affordable homes now on the market, many of whom have also been taking advantage of the $8,000 tax credit, are we beginning to finally see the housing market bounce back? The Department of Commerce recently reported that indeed the tax credit, along with historically low interest rates, have helped stimulate home sales making June’s numbers the highest since November. So is this the sign that many of us have been seeking? Is the housing market on its way towards uninterrupted growth?
While the prices of homes are continuing to fall all over the nation, home sale have increased for three consecutive months. The construction of new homes has picked up to levels rivaling the busiest period of last fall. As stated, home re-sales rose in June for the third consecutive month, causing many to believe that the worst of the housing recession is behind us.
We’re not out of the woods quite yet though. Keep in mind that although sales are continuing to rise, the sale of new homes in June was still 72% below the peak of four years ago. And let’s not forget about the large number of inventory homes currently on the market that need buyers. While there have been some positive signs that the market is improving, we’re still a long way from being back to what are considered normal levels.
The Midwest showed the strongest sales in the nation, where they increased 43% from May’s home sales total. There was also a rise in sales in the Northeast, with a 29% jump and the West with a 23% increase. Unfortunately for the South, sales actually declined during the same period.
$206,200 was the median sales price of a home in June, down over $28,000 from a year ago and down nearly $13,000 since May of 2009. Economists expect prices to continue to drop until sometime next year when competition from foreclosures subsides.
Many buyers are being lured by lower housing prices, lower interest rates and the federal tax credit for first time home buyers, where the buyers are given a tax credit of 10% of the purchase price of the home up to $8,000. This tax credit is only available if the home is closed before December 1, 2009; however, real estate and housing professionals alike are lobbying congress to extend this date.
Although the market appears to be recovering, that doesn’t mean it’s going to be strong anytime in the near future. The construction industry is for the most part crippled as of now, due to the high volume of vacant homes left sitting on the market.
Even if sales continue at their current pace, there are enough new homes on the market to sale for the next 9 months or more. One indicator of a balanced real-estate market is 6 months worth of new homes on the market for sale. This is a sign that we’re still not balanced, but it looks like we’re slowly getting there.
See more:
What’s Happening in the Housing Market?
Real Estate Agents See Some Hope
U.S. Housing Market Could be Facing Another Bubble
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Thanks for the reality check. I have been reading a lot of other blogs that are celebrating the rise in sales and saying we are out of the woods. Personally, I am not quite ready to say that. Of course, I HOPE that we are, but it is still too early to really know.
Thanks for sharing such good and mind blowing news. It would be good news to the Realtor.
Everybody is blaming subprime mortgages for what’s going on in the housing market. I think that the cost of living is just getting to high for people, and people just can’t afford to make ends meet.
.-= Daniel Corporate Housing´s last blog ..Stylish and affordable rental homes =-.
I am with Daniel. I think people can just no longer make ends meet. Altough the bank has some blame, we as homeowners have just as much fault.
This is uplifting news, but like you said, we aren’t out of the woods yet. I think realtors and banks still need to work together and be wise and cautious in the decisions that they make.