US Home Sales Jump
by Hiland Doolittle
Increasing unemployment and tight credit markets continue to drive home sales and median home prices downward according to the monthly Home Sales Report furnished by The National Association of Realtors. The monthly report, issued around the 25th of 
each month, reflected an unexpected increase in February sales raising expectations for annual sales of existing units. This encouraging news followed a dismal January report showing the lowest volume since the NAR report was initiated in January of 1999.
The National Association of Realtors Report is supported by some alarming statistics that highlight areas of concentration for the Obama Administration. A startling 290,631 properties either received default notices, auction notices or fell victim to outright seizures in February. February foreclosures came in at 161,976 surpassing January’s previous highs and marking a 30% increase in foreclosure activity over February 2008. The Obama plan includes a commitment of $275 billion to help struggling homeowners avoid foreclosure and stay in their homes.
While sales of existing units increased, median prices of existing units continued a dramatic fall as inventory of homes for sale surged by 5.2%. The median selling price indicates a 15.5% decrease since February 2008. The national average of existing home sales is $165,400 and units available for sale rose from 3.61 million in January to 3.80 million in February.
The home sales report includes current sales rates, total unit sales and median sales looking back over a 12 month period. Information is provided regionally and cumulatively.
Financial Markets Bolstered
Financial markets were prepared for a downward spiral and have received the NAR Report enthusiastically. The markets seem further buoyed by the proposed impact of recent Federal Reserve and Treasury actions. The administration remains committed to focusing on limiting risk in regulated financial sectors. The global response has been supportive of increased regulation as world markets look to the U.S. economy to lead a global recovery.
The Obama Administration has taken aggressive steps to counter the credit markets and lift institutional balance sheets. Dedicating $1.2 trillion to the economy and purchasing $750 billion in mortgage-backed debt and another $300 billion in Treasury debt bode well with global financial markets who see Quantitative Easing as a suitable remedy for the U.S. economy.
The Central Bank has agreed to double its purchase of debt from Fannie Mae and Freddie Mac and has raised limits to $200 billion in efforts to stabilize the troubled lenders.
While unit sales rise, the national real estate marketplace is clearly a buyer’s market as distressed sales and auctions impact the median selling price. Investors believe the government is well positioned to turn a profit over the long haul and banking institutions should be relieved by the Fed’s push to improve balance sheets.
The Next Move
Meanwhile the dollar reflects gains against the Euro as the government’s regulatory actions outweigh the inflationary risks of quantitative easing. World markets have long pushed for more oversight by the Federal Government and by bringing the taxpayers to the table, this action is expected and demanded.
Last week the 10 year Treasury Note cut losses to 1.6% according to Merrill Lynch. However, according to Adam York of Wachovia in Charlotte S.C.:
The issue is credit availability. Lower rates are great, but if no one’s getting a loan, it doesn’t really help
While Obama has had success resolving the availability of credit, buyers are cautious due to unemployment and tumbling prices. Most economists project further price declines by as much as 20% by the end of 2010. Since December 2008 the median selling price of existing homes has fallen $10,000.
The Obama stimulus package must counter the expected 9.4% unemployment rate before housing prices will rise. The administration has included an $8,000 tax credit for new home buyers, but market experts do not expect to feel the impact before April 2009.
Now that money appears to be available, government actions to trim unemployment not only help taxpayers but will mark a resurgence in real estate values. The market celebrated this win-win approach as early morning trading showed a rise of 300 points on the DOW and substantial worldwide gains.
Tags: Economy, home sales
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
