Existing Home Sales Up 10% in One Month

Just when you thought all the news about the economy was bad, statistics released by the National Association of Realtors (NAR) shows that existing home sales leaped by the largest amount in 28 years during the month of September. With today’s report that job openings fell for the second month in row, we’ve still got a long ways to go to end the Great Recession, but maybe existing home sales is a start.

The first thing to keep in mind is that sales are still incredibly low. Even with the 10% month-to-month September increase, existing home sales were still almost 20% below last year’s levels, so don’t pull out your rose-colored glasses just yet. However, it is interesting, and perhaps educational, to examine the reasons behind the September increase. There are a few obvious candidates.

1. Lower Home Prices – Compared to a year ago, the median home price has fallen 2.4%, not a mind-boggling number, but certainly worthy of note, especially when taken in conjunction with other factors. The median price of $171,700 continues the five-year downward trend which has seen houses drop a full 22% in price over that time period. That, friends, is a major correction.

2. First Time Buyers – The Federal $8,000 tax credit offered to first time home buyers expired on September 30. Qualified buyers had to close on a property by that day to receive the tax credit. For most Americans, $8,000 in tax credits is a big deal and if you were planning on buying a home soon anyway, why not push it up and claim Uncle Sam’s tax break?

3. Inventory – Inventory is a measure of how long the current supply of houses for sale would theoretically last at the current sales pace. August’s 12.0 month supply had dwindled to 10.7 by the end of September, which means the supply is contracting or – looking at like a capitalist – demand is beginning to push ahead of supply, even if only a little.

The point of bringing out all these numbers is to give real estate agents hard facts to point to when investment customers come calling. While no grand, long-term conclusions could possibly be drawn from the scant information presented, it certainly should qualify as interesting to those looking to acquire income properties for investment purposes. Don’t forget to check out our current roster of representative properties to buy for cash flow right now at JasonHartman.com.

The Bonus Commissions Team

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