New sales figures released by the National Association of Realtors this past week show a slight dip in existing home sales for the month of September.
Overall though, the statistics continue to show steady improvement of the housing market when compared to the same time period last year.
According to the numbers, sales of existing homes sold at an annual rate of 4.75 million in September which is down from 4.83 million the previous month. Even though that's slightly down from August, the September figures are 11% higher than they were in September 2011.
Even more good news -- the existing home sales numbers for August and September 2012 are the highest we’ve seen in the past two years.
So why the recent increase in real estate sales? Economists say there are several contributing factors.
Although they've slightly increased over the last few weeks, mortgage rates are still near their all-time lows.
According to Bankrate.com, the average interest rate for a 30-year, conventional, fixed-rate mortgage last week was 3.47%. That's up from the recently reported 3.39%, but it's still much lower than it has been in recent years.
The Federal Reserve plans to keep it that way, by purchasing $40 billion in mortgage-backed securities each month, as part of their Quantitative Easy policy. In fact, the Fed says we can count on seeing low interest rates all the way through 2015.
Another reason for the increase is the unemployment rate. September saw a slight decrease in the national average, which is good news for the housing market.
Plus, the rate of foreclosures in September was at an all-time low. According to the report from the National Association of Realtors, 24% of the homes sold in September were distressed properties. That's about on par with what we've seen the rest of the year, but it's also down 6% from this time last year.
The September sales numbers also indicated that the supply of homes available on the market fell to 5.9 months, the tightest it has been since the housing boom in May 2006.
So what does all of this mean?
Quite simply, these numbers show that the housing market is finally starting to recover -- slowly but surely.
The lower unemployment rate means more people have jobs, and therefore, more money to put towards home purchases.
The lower interest rates have influenced more people to test the housing market waters. These same people might have continued to sit on the sidelines waiting for a full economic recovery if interest rates were high.
So, more people are buying homes.
And, with fewer foreclosures, that means even fewer properties are available on the market.
Add it all up, and you have more people with more income, getting lower interest rates, buying more homes.
With fewer homes available, supply and demand kicks in, meaning prices go up!
The recent report from the National Association of Realtors confirms that conclusion.
The median price of a home sold during the month of September was $183,900. That's down $1,000 from August, but up 11.3% from a year earlier.
And, the National Association of Realtor's chief economist Lawrence Yun says he expects that trend to continue.
In the press release, Yun said, “The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production.”
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