U.S. home sales increased 11 percent to a two-year high in the third quarter as an $8,000 tax credit for first-time buyers boosted demand.
Sales of existing single-family homes and condominiums increased to 5.3 million at an annualized, seasonally adjusted rate from the previous quarter, the National Association of Realtors said today. The median price fell 11 percent from a year earlier to $177,900, the Chicago-based trade group said.
Distressed sales accounted for 30 percent of all transactions, down from 36 percent in the second quarter, the Realtors said. President Barack Obama signed legislation on Nov. 6 extending the housing credit that was set to expire at the end of this month. Demand from buyers seeking to use the benefit reduced the inventory of previously owned homes for sale to 3.63 million in September, the lowest since January, the group’s data show.
“What the tax credit did was make the housing market stronger by borrowing from future sales,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. “There’s payback after it expires in 2010 — we’ll see weaker demand.”
The sales gain to 5.3 million was the highest since the third quarter of 2007, when sales were 5.45 million.
Even as sales rose, 123 out of 153 metropolitan areas reported lower median existing single-family home prices in the third quarter and 30 had price gains, according to the Realtors.
The housing market is still being constrained by rising unemployment, record foreclosure filings and tighter credit standards by banks. Prospective buyers are also staying out of the market amid concern prices will continue to fall.
Companies have shed more than 7 million jobs since the recession began in December 2007, reducing the number of people qualified to buy a home and eroding the consumer spending that makes up about 70 percent of the world’s largest economy. In October, the unemployment rate rose to 10.2 percent, the highest since 1983.
U.S. foreclosure filings climbed to a record in the third quarter as lenders seized more properties from delinquent borrowers, according to RealtyTrac Inc. in Irvine, California. A total of 937,840 homes received a default or auction notice or were repossessed by banks, a 23 percent increase from a year earlier, the data company said.
In the second quarter, U.S. banks held $34 billion of properties acquired through foreclosure, including repossessed homes and condominium projects gone bust, according to the Federal Deposit Insurance Corp. in Washington. That’s almost double the $18.9 billion of real estate a year earlier.
The average U.S. rate for a 30-year fixed mortgage was 4.98 percent last week, falling from 5.03 percent in the previous week, according to mortgage financier Freddie Mac. The rate dropped to a record low of 4.78 percent in April.
On an annual basis, the fixed rate will probably average 5.2 percent this year and 5.7 percent in 2010, according to a forecast from the Realtors. Last year, the rate was 6.1 percent.
For all of 2009, sales of existing homes probably will total 4.98 million, up from 4.91 million in 2008, according to the Realtors’ forecast.