Existing home sales rose more than anticipated in August to a five-month high as investors scooped up distressed properties, according to the National Association of Realtors. Sales rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and were 18.6 percent higher than the 4.24 million-unit level in August 2010. The latest figures compare with a housing peak of 7.08 million in 2005, before the boom went bust and ushered in an 18-month recession.
"Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations," said Lawrence Yun, NAR chief economist. "In additional to bargain hunting, some investors are in the market to hedge against higher inflation."
Meanwhile, single-family home sales rose 8.5 percent to a seasonally adjusted annual rate of 4.47 million in August from 4.12 million in July, and are 20.2 percent above the 3.72 million pace in August 2010. The median existing single-family home price was $168,400 in August, which is 5.4 percent below a year ago.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the market is remarkably affordable for people with secure jobs, good credit and long-term plans. "All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation," he said.
Still, hurdles remain for a full housing recovery.
"The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks," Phipps said.
