The National Association of Realtors latest existing-home sales survey shows that sales are on the rise again. This is the third straight month of increases as well the rate rising above year ago levels. December saw a 5.0 percent rise and is now 3.6 percent above December 2010. The entire of year of 2011 experienced an overall 1.7 percent rise in existing-home sales over 2010.
Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. "The pattern of home sales in recent months demonstrates a market in recovery," he said. "Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market."
Regional increases were seen across the board, but had the largest increase in the Northeast which rose by 10.7 percent for the month of December. Next in line was the Midwest, rising 8.3 percent. The South and west followed suite, rising 2.9 and 2.6 percent respectively.
This rise in existing-home sales has led to a dip in available inventory, which is welcome news for many sellers who are facing steep competition. NAR reports "available inventory has trended down since setting a record of 4.04 million in July 2007, and is at the lowest level since March 2005 when there were 2.30 million homes on the market."
Total housing inventory fell a staggering 9.2 percent in December to 2.38 million homes for sale. "The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future," Yun said.
NAR President Moe Viessi, broker-owner of Veissi & Associates Inc., in Miami, said more buyers are expected to take advantage of market conditions this year. "The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves," he said. "More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services."
Partially to blame for pent up demand has been the large amount of contract failures. The NAR says failures were reported by 33 percent of NAR members in December, unchanged from November; they were 9 percent in December 2010.
Declined mortgages and depressed home values leading to loan values under appraised values are heavily at fault. A recent Government Accountability Office (GOA) found that the appraisal process needs more monitoring procedures.
A recent NAHB survey shows that one out three builders have lost signed sales contracts because of flawed appraisals.
NAHB Chairman Bob Nielsen says, "The current system is not working." He called for resolution of a flawed appraisal process. He says the current system "fosters price instability, puts more families in danger of default or foreclosure, and undermines the housing and economic recovery."