Saturday, August 29, 2009

July Housing Stats - Will positive trends continue?

With economists and news media reporting housing as the good news for a change, it would be easy to think the worst is now behind us. This month's statistics definitely continue the trends in a positive direction, but underlying the movement are temporary factors that will likely keep the pressure on sellers and prices flat for a long time to come.

The good news in July's statistics include:
  • The absorption rate (rate of sales to inventory) fell to 7 months in the Cincinnati area. This is the lowest rate in 3 years.
  • The number of year over year July sales increased by 150.
  • On a national level, existing home sales increased for the 4th month in a row. The first time that has occurred in 5 years.
  • Single family home starts increased 1.7% to an annual rate of 490,000.
  • The Case-Schiller price index reflected a 3% gain for the April - June period. The first quarterly increase in 3 years.
So, why continue to keep a lid on enthusiasm? The biggest reasons are:
  • The first-time buyer credit deadline is bringing more buyers into the market, but primarily at the lower end of the market. No one is sure what will happen when the credit ends.
  • Large banks are holding foreclosures off the market while attempting loan modifications. Inventory levels are expected to increase as they end a self-imposed moratorium. Foreclosures are likely to pervade the market as banks work through remaining subprime and adjustable rate mortgages, with a peak in foreclosures around the fall of 2010.
One important note to first-time buyers - closings are often taking longer than the usual 30 days. 45 to 60 days is not unusual. If the tax credit is important to your purchase plans, I recommend getting a contract no later than October 15th.

For a detailed look at July stats, see the charts below:

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