Existing home sales up in 2nd quarter

08.12.09
By Sarah Beldo

Is now the right time to apply for a mortgage loan and buy that new house? Or do prices still have further to fall?

It seems that more Americans are edging back into the housing market. The pace of existing-home sales rose during the second quarter in many areas of the country, according to new data from the National Association of Realtors.

From April to June, sales levels for both single-family homes and condos increased by 3.8 percent to 4.76 million. In the first three months of the year, 4.58 million of these properties were sold.

Lawrence Yun, chief economist at the NAR, said that price drops and low rates on home loans had increased affordability for many buyers.

"With low interest rates, lower home prices and a first-time buyer tax credit, we've been seeing healthy increases in home sales, which are a hopeful sign for the economy," he commented.

The average interest rate for a 30-year fixed-rate mortgage fell to 5.03 percent in the second quarter, according to Freddie Mac.

While the newest sales data may initially seem promising, the current level of existing home sales is still 2.9 percent lower than the 4.9 million homes sold during the second quarter of 2008.

And prices are also much lower than they were last year. The NAR said the median existing single-family house price was $174,100 - a 15.6 percent drop from one year ago.

Foreclosures and short sales made up more than one-third (36 percent) of sales during the quarter, which helps explain why the median house prices has plummeted so far.

Some analysts suggest the housing market will not recover until the country sees the unemployment rate turn around.

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Price drops and low rates on mortgage loans have spurred home sales.