The 4-Year “Buyer’s Market” Ends. Home Prices To Rise In 2012.
In October, despite sparse home inventory, the number of properties sold still increased 1.4% nationwide. If home prices really do change with Supply and Demand, 2012 should keep home sellers happy.
Fewer Homes For Sale; Number Of Sales Rising
According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, October Existing Home Sales gained 70,000 units as compared to September, registering 4.97 million existing homes sold nationwide.
An "existing home" is a home that has been previously occupied.
As compared to prior months, the national stock of homes for sale is depleted. Just 3.3 million homes were listed for sale last month. This represents a 2 percent drop from September and marks the sparsest home resale inventory of the year.
The current home supply would last 8.0 months at today's sales pace. Homes haven't sold that quickly since January 2010 -- a month boosted by last year's federal home buyer tax credit program.
First-Time Buyers Make 34% Of All Purchases
The REALTOR® trade group report contained other noteworthy statistics, too :
- 34 percent of all home resales were made to first-time buyers
- 29 percent of all home resales were made with cash
- 28 percent of all home resales were for foreclosed homes, or short sales
Furthermore, the report said that fully one-third of transactions "failed" last month as a result of homes not appraising for the purchase price; a buyer's failure to achieve a mortgage approval; and, insurmountable home inspection issues.
"Chain Reaction" failures are to blame, too; in which a buyer can't get financed for a seller's home, forcing the seller to cancel his subsequent purchase. And so on.
October's 33% contract failure rate is gargantuan as compared to the failure rates of September 2011 (18%) and October 2010 (8%). The high number of cancellation underscores the importance of getting pre-qualified to purchase, and of buying a home "in good condition".
It also signals that more buyers are trying to buy homes than are included in the Existing Home Sales figures.
This is a "buy signal". Home supplies are falling and sales are increasing. Basic economics says home prices should start to rise in most U.S. markets, if they haven't already.
See What Your Mortgage Rate Would Look Like
Home prices may be rising, but mortgage rates remain low. For now, at least. Freddie Mac reports average 30-year fixed rate mortgage rates near all-time lows, helping to keep homes as affordable as they've been in history.
You'll pay more to buy your new home, but you'll pay less to finance it.