Ray of light seen for battered home sales

Dec 9, 2008 @ 3:28 pm

By Janet Morrissey

Pending sales of existing homes and median home prices fell in October, although the declines were smaller than anticipated — and there were even signs of improvement in certain markets.

The Pending Home Sales Index, which tracks contracts signed during the month, stood at 88.9 in October, down 0.7% from September and down 1% from a year ago, according to the National Association of Realtors in Washington.

However, the decline is smaller than the 3.5% decrease economists had been expecting.

“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year,” Lawrence Yun, NAR’s chief economist, said in a statement.

Certain regions showed improvement between September and October, such as the South, where the index rose 7.8%, and the Northeast, where the index rose 0.6%.

Some markets actually posted healthy gains in pending home sales: These included certain markets in Florida and California as well as Providence, R.I., Lansing, Mich., Oklahoma City and Las Vegas.

Charles McMillan, NAR’s president, said he’s encouraged by the efforts the government is making to bring down interest rates and help homebuyers.

“More sales will stabilize home prices by bringing down inventory and would lessen foreclosure pressure,” he said.

Mr. Yun expects existing home sales will total 4.96 million this year and increase to 5.19 million in 2009 and 5.55 million in 2010.

He sees new home sales totaling 486,000 this year, dropping to 393,000 in 2009 before rebounding to 446,000 in 2010.

In a separate survey, home prices continued to fall in October, although there was some improvement in Arizona and Florida, according to Integrated Asset Services LLC, a Denver company that specializes in default mortgage services.

The firm’s IAS360 Home Price Index showed median home prices fell in October, dipping 1.7% from September and 12.9% from a year ago.

The index, which tracks changes in median prices of single-family homes in 15,000 neighborhoods, indicated prices fell in all four U.S. census regions, with the biggest year-over-year declines coming in the South and West, where prices tumbled 10.2% and 18.7% respectively.

The Midwest and Northeast saw median prices dip only 2.9% and 8.1% respectively.

Among the nine more segmented census divisions, the Pacific area posted the biggest year-over-year price decline in October, falling 20%.

This was followed by the Mountain division, which plunged 12.4% and the South Atlantic, which slipped 10.6%.

The census divisions seeing the smallest price declines were the West South Central area, which slipped only 1.7% and the East North Central area, which fell 2.4%.

However, there appears to be a small light of hope among the gloomy data as certain counties in Arizona and Florida — which are two states hit hardest by the housing crisis — showed home price increases.

The Florida counties of Alachua, Bay and Sumter all posted year-over-year increases, while the Arizona counties of Coconino, Maricopa, and Yuma saw price slight price appreciation between September and October.

“We’re continuing to see a decline in housing prices across the country and at the county level,” Dave McCarthy, president and chief executive of Integrated Asset, said in a statement.

“However, we’re also seeing signs of strengthening in counties that are located in ground zero states of the housing crisis.”

He said he plans to monitor the individual counties carefully as they will be “the harbinger of signs of a market recovery.”

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