RISMEDIA, October 20, 2010—The summer season of home buying was a difficult one because many buyers purchased earlier in the spring in an attempt to qualify for the government’s tax credit. Now the market is still attempting to return to traditional seasonal trends. A monthly survey of 54 metropolitan areas indicates that sales were 6.4% below those in August and 20.6% below sales in September 2009. The inventory of homes for sale is dropping slightly, which has resulted in a stabilization of prices.
“We anticipated the drop in home sales this summer due to the tax credit, and we usually see sales in September fall below August levels, but we’re encouraged by reports of signed contracts in the field,” said Margaret Kelly, CEO of RE/MAX, LLC. “An increase in signed contract activity should translate into increased home sales in the coming months.”
Transactions – Year-Over-Year Change
It seems clear that home buyers trying to take advantage of the tax credit bought early. Sales in the spring were much higher than normal. This could explain why September 2010 sales were 20.6% below September last year. September sales were also down from the previous month by 6.4%. Much of this drop may be due to the usual trend of slower sales at the end of the summer. Of the 54 metro areas, only one reported higher sales from a year ago. Miami showed a 3.2% increase over September 2009.
Median Sales Price – Year-Over-Year Change
Even though transactions dropped in the month of September, home prices remained relatively stable, and 33 of the 54 metro areas surveyed showed a year-to-year increase in home sales prices. Overall, prices were down 2.7% from August, but still up only 0.9% from a year ago. Prices are still higher than 2009 in California cities and are up in the South and Midwest too; Raleigh, NC +11.6%; Pittsburgh, PA +8.2%; Detroit, MI +7.7%; Little Rock, AR +6.4%; Nashville, TN +5.7%; Philadelphia, PA +5.2%; Jackson, MS +4.7%; and Charlotte, NC +4.2%.
Days On Market – Average of 54 Metro Areas
For the homes that sold in the survey’s 54 metro areas, the average number of days it took from listing to signed contract was 88, four days longer than the 84 day average reported last month and also higher than the 87 day average in September one year ago.
Months Supply of Inventory – Average of 54 Metro Areas
The inventory of homes on the market in September dropped 2.8% from August and is 0.52% lower than the inventory in September 2009. Based on sales contracts signed in September, the Months Supply of Inventory in the survey’s 54 cities was 9.8, which is slightly higher than the 9.1 supply reported in August and higher than the 7.1 month supply in September 2009. The Months Supply of Inventory indicates how long it would take to eliminate the current inventory of homes for sale in the survey’s 54 metro areas at the current rate of sales. A six month supply is considered a market that is balanced equally between buyers and sellers.
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