Home sales rise in September, but a housing glut and concerns remain
Home sales are still below the rate of a year ago, as is the median price. Concerns persist that foreclosures and the slow economy threaten even lower values.
The pace of home sales gathered steam in September, a welcome sign for a housing market that remains troubled across much of the United States.Skip to next paragraph
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Previously owned homes sold at an annualized pace of 4.53 million units, up from 4.12 million a month earlier, the National Association of Realtors reported.
But the Realtors report also noted a decline in the median price of homes compared with a year ago, consistent with concerns among some analysts that foreclosures and a still weak economy could further depress housing prices, which in turn could lead to more loan defaults.
The reported monthly improvement follows a sharp decline in sales activity in mid-summer, as a special federal tax credit for home buyers expired.
Despite the progress, home sales remain weak relative to the large supply of homes for sale. Some 4 million homes are on the market, representing a supply that would take 11 months to sell at the current level of activity. That's down from the 12-month supply of homes that existed in August, according to the Realtors association. But the housing market hasn't seen a more normal supply of six months-worth or so since the onset of recession in 2007.
The improvement in home sales also could face a new headwind: concern that legal wrangling over foreclosure documentation could curb the flow of distressed properties onto the housing market. The paperwork problems could also dampen the spirits of homebuyers, if they worry about whether they'll be able to obtain a clear title to a home.
'Relatively good news'
"This report is relatively goods news, but the housing market situation has a long way to go before it fully recovers," Chris Christopher, an economist at IHS Global Insight, said in an analysis of the new numbers. "The question remains of the impact of the foreclosure debacle that reared its ugly head in the latter part of September."
Mr. Christopher says the main drag on the housing market, however, is something simpler: employment conditions. The more the job market begins to improve, he says, the more that should translate into home-buyer confidence.
The Realtors report said that despite the one-month increase, the pace of home-sale activity in September was still 19 percent lower than the same month a year ago, which saw annualized sales of 5.6 million homes. The median sales price this September was $171,700, down slightly from about $176,000 a year ago.
All four major regions of the country showed a rise in sales volume.