Thursday, October 20, 2011

Home sales up 14.3 percent, prices fall 4.5 percent in US West region

Home prices in the West region of the U.S., which includes Colorado, fell 4.5 percent from September 2010 to September 2011. According to new existing home sales data, released today by the National Association of Realtors, the median home price fell more in the West than in any other region. The median home price in the Midweset, for example, fell 1.4 percent from September 2010 to September 2011.

The first graph shows median home prices for all regions plus the U.S. The median home price in the West during the past six months has ranged from $191,000 to $208,000. The median price was $207,400 during September 2011, and during September of 2010, the median price for the region was $217,100.

Nationally, home prices fell 3.5 percent, year over year.

Home sales transactions (closings) rose 14.3 percent in the West region, which was close to the national change in closings of 14.6 percent, year over year. Home sales rose 20 percent in the Midwest from September 2010 to September 2011.

The second graph shows closings by region. In general, closings increased each month from January 2011 to June 2011. July's total fell unexpectedly, but rebounded in August, and then declined again in September. Sales are now expected to decline each month until next January due to seasonal factors. While all regions except the northeast showed a month-over-month decrease from August to September, all regions showed increases in the year-over-year comparisons for September.

Overall, September's sales activity was higher than was the case during September of last year. This was expected. During the summer of 2010, sales activity fell significantly following the end of the home buyer tax credits. Many homeowners rushed to close their home sales by June 2010 in order to take advantage of the tax credit. Consequently, the second half of 2010 showed diminished home sales activity.

The NAR data tends to be the most optimistic among the various reports on home prices and home sales activity. Most recent home price indices, such as those provided by CoreLogic and Case-Shiller, indicate continued declines in price.

Conclusions: As can be seen in the first graph, home prices during recent months are down from where they were a year earlier, and the median price in the West is still below the annualized median prices for 2008, 2009 and 2010. The region shows stability in prices and a lack of significant upward pressure in prices right now.

Closings continue to be hampered by a lack of available financing and, according to the NAR release, by a significant number of cancellations on home purchases. According to the NAR press release:

Lawrence Yun, NAR chief economist, said the market has been stable although at low levels, and there is plenty of room for improvement. “Existing-home sales have bounced around this year, staying relatively close to the current level in most months,” he said. “The irony is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable - this speaks to an unfulfilled demand.”.