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Real Estate Market Commentary - October 2013
by Peter L. Zachary, MAI, MRICS

Recently there was a disheartening article in the New York Times entitled “Sales of Existing Homes Declines by 1.9% in September” on October 22, 2013. The article in the Business Day section said:

“Americans bought fewer existing homes in September than in the previous month, held back by higher mortgage rates and rising prices.

The National Association of Realtors said on Monday that sales of previously owned homes fell 1.9 percent last month to a seasonally adjusted annual rate of 5.29 million. That is down from a pace of 5.39 million in August, which was revised lower.

The sales pace in August equaled July’s place. Both were the highest in four years and are consistent with a healthy market.

Mortgage rates rose significantly over the summer, threatening to slow a recovery in housing that had helped drive modest economic growth.

But economists expect home sales will remain healthy because rates have stabilized. Final sales in September reflected contracts signed in July and August when rates were about a percentage higher than in May.

The median home has risen 11.7 percent in the past year, to $199,200, the Realtors association said. That is also the slowest annual gain in five months.

Price increases may be slowing because more homes are coming on the market. The supply of available homes rose by 1.8 percent from a year ago, to 2.21 million, the first year-over-year increase in two and a half years.

Still, many first-time buyers have been unable to enter the market. They made up just 28 percent of purchases in September, down from 32 percent a year ago. In healthier housing markets, they typically make up at least 40 percent of buyers.

First-time buyers are having trouble qualifying for loans because many banks have adopted tougher lending restrictions.

Instead, investors and Americans willing to pay cash are playing an outsize role in sales. Cash purchases made up 33 percent of September’s sales, up from 28 percent a year ago.”

More to come next month. Read previous Real Estate & Housing Market News.

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