Will Home Prices Rise Among Tight Inventory And Strong Sales?

The National Association of Realtors (NAR) said that tight home inventory and strong sales combined with the lowest inventory in six years helped existing prices post annual gains for the eighth month in a row in October, 2012.  Existing homes sales were up 2.1% from September to October and 10.9% from a year ago, to a seasonally adjusted annual rate of 4.79 million.  At $187,600, the national median price for all housing types was up 11.1% from a year ago. The last time the national median price posted eight consecutive months of annual gains was before the crash in 2005 and 2006.

Rising home prices are beginning to boost home equity and the improvement could be even greater in 2013. Rising home prices have resulted in a $760 billion growth in home equity during the past year. Each percentage point of price appreciation translates into an additional $190b in home equity. In the Collin County real estate market 8,258 homes were sold through July 2012.  In the Tarrant County real estate market 10,393 were sold through July 2012.  In the Denton Count real estate market 4,495 homes were sold through July 2012.

NAR estimated there were 2.14 million existing homes listed for sale at the end of October, a 5.4-month supply at the current sales pace. That's the tightest inventory since February 2006, when the months' supply of homes stood at 5.2 months. October's home inventory is down from a 5.6-month supply in September and represents a 21.9%t decline from the 7.6-month supply that existed a year ago. Many analysts agree that a six month supply of housing is an even balance between seller and buyer demand.

More Interesting Information: Homes were on the market for a median of 71 days in October which is down a full 26% from a year ago when the time to sell an existing home took a median of 96 days.  First time buyers accounted for 31% of all home sales in October, down from last October's 34%.  Distressed homes, foreclosures and short sales, accounted for 24% of existing home sales in October which is down from 28% since last October.  There was an even split between short sales and foreclosures. These distressed sales sold for 14% and 20% below market value.  All cash sales accounted for 29% of October's sales which was the same as last year and a point higher than September’s sales. Investor buyers accounted for 20% of existing home sales in October, 2012.

All US regions saw the sales of existing homes and prices rise in October from a year earlier. The Midwest lead the way with an 18.1% annual increase of 1.11 million units and a median sales price of $145,600, up 10.6% from last October.  The Northeast saw home sales increase 13.7% from a year ago to 580,000 units with median sales prices up 4.6%, on an annual basis, to $232,600. The annual pace of sales dropped 1.7% in the Northeast from September.  Existing home sales in the South were up 11% to an annual pace of 1.92 million units from October 2011. Median sale prices were up to $152,200, 8.2% above last October's median price.  In the West home sales were up 3.5% from a year ago to an annual rate of 1.18 million units, and median sales prices sprang ahead 21.2% from last October to $242,100.