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PrintWASHINGTON -- Federal programs designed to jump-start the housing market helped boost sales of previously owned homes to their highest level since February 2007 and whittle down the excess supply of homes on the market in November.
The National Association of Realtors reported yesterday that sales of existing single-family homes, townhomes, condominiums and cooperatives rose 7.4 percent in November from the previous month, to a seasonally adjusted annual rate of 6.54 million homes. Sales were up 44 percent from a year ago, the highest annual gain since the group started tracking the data in 1999.
A separate report released yesterday shows that the economy grew at a more tepid pace than thought over the summer, confirming that the nation's return to growth earlier in the year was less than resounding. Gross domestic product, or GDP, rose at a 2.2 percent annual rate in the July-to-September quarter -- less than the 2.8 percent most recently estimated, and well below the 3.5 percent the government originally announced.
Around Pittsburgh, the news was particularly good, as the region showed the largest home price increase in the nine-state Northeast, almost 3 percent over November 2008.
The region's median home price of $117,950 was the Northeast's lowest, making it attractive for first-time buyers, who flooded the market last month. "I've seen people moving back to Pittsburgh from other areas," said Christa Ross with ReMax Select Realty in Cranberry.
PDFsDetails of the GDP report along with the new housing numbers suggest that the economy is growing at a more rapid clip in the fourth quarter. Businesses drew down inventories more rapidly than previously thought, laying the groundwork for an economic bump as companies rebuild those inventories, and many forecasters now think that the economy is growing at a 3 percent or higher rate in the fourth quarter.
The Realtors group attributes the rise in home buying to a federal program that helped push down interest rates and a rush to take advantage of a tax credit for first-time buyers that was due to expire Nov. 30. The tax credit has since been extended and expanded to include other types of buyers to ensure that the housing market could sustain its recovery.
But some analysts singled out low prices as the key driver. "Clearly, the tax credit and the feds meddling in the mortgage market has helped add an extra kicker to home sales in the short term, but that's not the only factor at work," said Weiss Research housing analyst Michael Larson. "As housing prices fall, home ownership becomes competitive with renting, and buyers start to come out of the woodwork."
Distressed properties made up 33 percent of all sales in November and continue to distort median prices in every region of the country, the Realtors group reported.
The median price for existing homes nationally was $172,600 in November, down 4.3 percent from a year ago. In the South, it was $151,400, down 1.4 percent.
As sales pick up, the excess homes clear out, which helps stabilize prices. The supply of existing homes for sale at the end of November declined 1.3 percent, to 3.52 million. If sales continue at the current pace, there would be a 6.5-month supply of existing homes on the market, down from a seven-month supply in October. Generally, a six-month supply is considered healthy.
Pittsburgh-area sales rose almost 57 percent over last year's. Activity waned after the federal tax credit program was extended, though it is expected to rise again with the new year.
Gross domestic product, which captures the value of goods and services produced within U.S. borders during a given time period, was revised downward because investment in software and other business investments was weaker, and inventories depleted more, than first thought. Also personal consumption expenditures and government spending rose slightly less than earlier estimated.
The 2.2 percent growth rate is below the level that economists think the nation is capable of attaining in the long run, meaning the United States was not climbing out of its deep economic hole in the third quarter. That helps explain why the job market has remained weak, despite several consecutive months of apparent growth in production of goods and services.
Washington correspondent Daniel Malloy writes the "Pittsburgh On The Potomac" blog exclusively at PG+, a members-only web site of the Pittsburgh Post-Gazette. Our introduction to PG+ gives you all the details.
