Record Low Interest Rates Equal More Home Sales

?A new report from The National Association of Realtors shows that home sales figures in the U.S. for 2011 were better than expected and despite the difficult economic times, there actually was a gain in full-year sales volume. The Realtors report showed that the pace of annual sales in December reached 4.6 million homes, a number that was up a full 5% from the month prior and up 3.6% from a year ago. December marked the third month in a row of home sales improvement while the overall fourth-quarter sales volume was up by 1.7% from the 2010 figures.
 
According to the association’s interpretation, the improvement in home sales during the last few months of the year is a sign of a market in recovery, and that the record low mortgage interest rates along with a slight improvement in job growth and homes selling at bargain prices have all had the effect of giving would-be homeowners more confidence to enter the home market.
 
Homes have been selling at record low prices because of the huge numbers of distressed sales that continue to make up a significant part of the market. The median price of homes in 2011 was $166,100, down 3.9% from the levels in 2010. Looking at monthly figures, median prices were $164,500 for December 2011, a figure down 2.5% from December of 2010. The Realtor data shows that the large numbers of distressed properties on the market have played a huge part in keeping home prices down. Foreclosed homes sold for average prices that were 22% below market value in December, up from 20% just one year ago. Foreclosures accounted for 21% of all home sales in 2011. The numbers for short sales where homes are sold for less than the amount owed on the mortgage, dropped a bit though, with short sale homes selling for a 13% discount in 2011, compared to 16% a year ago in December 2010.
 
The Realtor’s report shows the housing market is making progress working through the excess inventory of homes for sale and there is only a 6 month supply of homes available for sale. That number is the smallest since March 2005, and if the current conditions prevail, both home prices and home sales should continue to improve. The Realtor’s latest home sales report is an encouraging sign that a true housing market recovery has begun.