The ever-sunny National Association of Realtors released its report on the housing market in Q2. While both median prices and home sales continued to decline on both a year-over-year and quarter-over-quarter basis, there were early signs of stabilisation as declines slowed and buyers “responded” to lower prices and cleared some inventory off the market.
The median existing, single-family home price fell to $206,500, down 7.6% year-over-year. decelerating slightly from Q1’s drop of 7.7%. Existing home sales fell only 0.8% from the previous quarter to 4.91 million (down 16.3% year-over-year). This was also a deceleration. In Q1, existing home sales fell 22.2%. NAR:
Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said. Compared with the first quarter, existing-home sales increased 25.8 per cent in California, 25.0 per cent in Nevada, 20.5 per cent in Arizona and 10.1 per cent in Florida. “Buyers in these areas are responding to deeply discounted home prices.”
The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 per cent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 per cent from the second quarter of 2007, and Riverside-San Bernardino-Ontario, Calif., where it dropped 32.7 per cent to $265,200. “Each of these areas has seen a strong buyer response in recent months to the big cuts in home prices,” Yun said.
The NAR’s chief bull Lawrence Yun went on to suggest that there may be light at the end of the tunnel for some of the most distressed markets as falling prices finally induce real buying pressure and as a housing bill provides real relief:
Yun said home price conditions reflect comparisons from 12 months ago. “Prices having fallen sharply and quickly in very distressed markets, but most or all of the price declines may have already occurred in these areas since buyers have now returned to those markets,” he said. “Furthermore, the momentum of buying is likely to continue in light of the housing stimulus package that was recently enacted. About 2.5 million first-time buyers are expected to take advantage of the $7,500 tax credit between now and the middle of next year.”
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