Home prices boosting affordability, sales
Home sales in West up 8.1%, although prices still tumble
Housing affordability improved in most metropolitan areas due to softer existing-home prices and record-low mortgage interest rates in the fourth quarter of 2011, according to the latest quarterly report by the National Association of Realtors.
Rising sales and lower inventory created more balanced conditions, NAR added, with favorable conditions dominating across the country.
The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines.
Lawrence Yun, NAR chief economist, said the figures reflect more home sales at lower prices.
"Sales have risen strongly in lower price ranges from one year ago, while sales at the upper end remain sluggish," he said. "More importantly, we're seeing a consistent trend of declining inventory, which means supply and demand conditions are becoming more balanced in more areas, which will help stabilize home prices."
The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2% from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less.
Distressed homes -- foreclosures and short sales which sold at discounts averaging 15-20% -- accounted for 30% of fourth-quarter sales. They were 34% a year earlier.
Annual price measures, also reported this week, generally smooth out any quarterly swings.
"Broadly speaking, the very middle of the country, from the Dakotas and Nebraska to Oklahoma and Texas, has experienced very stable home price trends because of stronger job creation in those areas," Yun said.
Total existing-home sales, including single-family and condo, increased 5.9% to a seasonally adjusted annual rate of 4.42 million in the fourth quarter from 4.17 million in the third quarter, and were 9.2% above the 4.04 million pace during the fourth quarter of 2010. All regions rose from the third quarter and from a year ago.
At the end of the fourth quarter there were 2.38 million existing homes available for sale, which is 21.2% lower than the close of the fourth quarter of 2010 when there were 3.02 million homes on the market.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said market conditions vary widely around the country.
"Even with record high housing affordability conditions, all real estate is local," he said. "Both buyers and sellers need to be aware of what works in their local market, and Realtors are the best resource because they have unparalleled knowledge of local market conditions and options."
Metro areas with the greatest housing affordability conditions in 2011 include the Detroit-Warren-Livonia area of Michigan; Toledo, Ohio; and Decatur, Ill.
"Clearly, the Midwest has the greatest concentration of areas where home buyers have the strongest purchasing power, followed by the South," Yun said. "Metropolitan areas on the West Coast and along the Northeastern seaboard have generally higher-priced homes, which account for lower affordability."
The share of all-cash home purchases in the fourth quarter was 29%, unchanged from the third quarter. They represented 30% of all sales in the fourth quarter of 2010.
Investors, who are drawn by bargain prices and account for the bulk of cash purchases, accounted for 19% of transactions in the fourth quarter of 2011, compared to 20% in the third quarter and 19% a year ago.
First-time buyers purchased 33% of homes in the fourth quarter, slightly up from 32% in both the third quarter and the fourth quarter of 2010.
Regionally, existing-home sales in the West increased 8.1% in the fourth quarter and are 8.4% higher than a year ago. The median existing single-family home price in the West declined 4.2% to $205,200 in the fourth quarter from the fourth quarter of 2010.
Existing-home sales in the Northeast rose 6.3% in the fourth quarter and are 3.7% above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6% to $229,200 in the fourth quarter from a year ago.
In the Midwest, existing-home sales increased 7.0% in the fourth quarter and are 14.1% higher than a year ago. The median existing single-family home price in the Midwest declined 3.3% to $134,100 in the fourth quarter from the fourth quarter in 2010.
Existing-home sales in the South rose 3.8% in the fourth quarter and are 9.1% above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8% from a year earlier.