Despite the devastation of Hurricane Sandy, sales of existing homes increased in October and prices continue their climb, according to the National Association of Realtors.
The number of homes sold in October 2012 — 4.79 million — went up 10.9 percent over the October 2011 number of 4.32 million. Foreclosures and short sales made up about 24 percent of the October sales.
Lawrence Yun , NAR chief economist, said there was some impact from Hurricane Sandy. "Home sales continue to trend up and most October transactions were completed by the time the storm hit, but the growing demand with limited inventory is pressuring home prices in much of the country," he said. "We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions."
The number of houses on the market fell to 2.14 million existing homes, the lowest number since February 2006.
Meanwhile, mortgage rates continue at low levels, too. Freddie Mac says the 30-year conventional fixed-rate mortgage hit a new low at 3.38 percent in October. In October 2011, the rate was 4.07.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said record low mortgage interest rates shouldn't be taken for granted. "Even with rising home prices, we'll continue to see favorable housing affordability conditions over the coming year, but they won't last forever," he said.
"Inflationary pressures are expected to build during the next two years. As a result, mortgage interest rates will also rise with inflation. Buyers who are currently held back by tight mortgage credit standards should work to improve their credit scores so they'll be able to qualify for a mortgage while conditions are still favorable."
Although the overall market is improving, things aren’t boding as well for first-time buyers, who are making up less of the housing market. They normal comprise about 40 percent of the market but today the percentage has slipped to 31 percent of buyers, according to NAR data.
“Financing of first-time home buyers with low down payments threatens to become a significant problem in the U.S. housing market,” Thomas Popik, research director for Campbell Surveys, recently wrote.
“Fifty percent of first-time home buyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict.”
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