Existing-home sales hit 8-month high

Posted by Elizabeth Strott on Thursday, July 23, 2009 10:33 AM on MSN Money

Inventories fall, adding hopes that the housing market is starting to recover.

Existing-home sales rose 3.6% in June to an annualized pace of 4.86 million, to the highest level since October, the National Association of Realtors reported this morning.

It was the third monthly increase in a row.

Economists had expected an annualized pace of 4.85 million last month. Sales are down 0.2% from June of 2008.

Inventories fell 0.7% to 3.82 million in June. At the current sales pace, it would take 9.4 months to sell homes on the market, an improvement from the 9.8 months in May.

A 7-month supply is typically consistent with stabilization in prices, NAR chief economist Lawrence Yun, said in a press conference. It may take until the end of this year or early 2010 before property values steady, Yun added.

So who's buying? Tax incentives are helping spark resale activity in lower-priced homes. The supply of homes under $250,000 is under a six-month supply, while the supply of homes over $1 million is over 20 months.

That excess supply is contributing to the slump in home prices. The median price of an existing home fell 15.4% to $181,800 from $215,000 in June 2008.

June is traditionally one of the best sales months of the year as families prepare to move before the start of the next school term, according to the NAR. The group adjusts the figures for these seasonal variations, however.

Home sales peaked in August 2005 at an annualized rate of more than 7.2 million. Sales have not topped the 5 million mark since last September.

The Perfect Time to Buy a Home!

WashingtonBizJournals.com reported the following in February, 2009...

“A new real estate value survey from real estate data service Zillow.com says American homeowners saw $3.3 trillion erased from the value of their real estate in 2008.”

They went on to say...

“In the Washington area, median home values fell 14.8 percent in 2008 to $334,443. In the Baltimore market median home values dropped 10 percent to $258,263.”

Sounds like bad news, doesn’t it? Well, if you are a homeowner who must sell now and you don’t have plans to move up to a more expensive home, this is bad news.

The good news is if you’re purchasing a home right now, I’ve got five great reasons you should make your move...

1. HOMES ARE ON SALE... They’re actually on CLEARANCE... The lowest prices we’ve seen in years! We’ve seen “Fast-dropping interest rates and the most affordable homes in more than three decades...” according to a report released Tuesday by the National Association of Realtors.


2. Pair that with the amazing interest rates that are available today – somewhere in the 5% neighborhood – and you’re CRAZY to be renting! Here’s how I see it: Renting = paying off someone else’s mortgage for them. Why would you?


3. There are a lot of homes from which to choose! In the real estate industry, we call this a lot of ‘inventory’ Lots of inventory + few buyers = a buyers market!


4. One of the greatest myths today is that you must have a 20% down payment in order to buy today. WRONG! Guess what? More good news…FHA loans only require at 3.5% down payment right now. Yes, you will have to pay MIP (Mortgage Insurance Premium) but that is only about 1%, and it’s part of your monthly payment.


5. Here’s the icing on the cake! Most sellers will pay your closing costs for you!

If you are still frightened by the thought of purchasing a home, consider these wise words from the world’s wealthiest man, Warren Buffett. In a shareholders meeting in 1986 he explained one of his rules for smart living and savvy investing: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

So, go ahead and get started on your path to prosperity. Be bold and grab this opportunity before the market turns around and you’re caught up in the frenzy of all the other buyers who’ve been waiting for the market to “bottom out.”