Condo Sales Drop in March, But Number of First Time Homebuyers Is up, Says NAR

By Anuradha Kher, Online News EditorWashington, D.C.–Existing-home sales (including single-family, condos and townhomes) eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the National Association of Realtors. Existing condominium and co-op sales fell 4.1 percent to a seasonally adjusted annual rate of 470,000 units in March from 490,000 in February, and are 17.8 percent below the 572,000-unit pace a year ago. The median existing condo price was $177,600 in March, down 18.7 percent from March 2008. Lawrence Yun, NAR chief economist, says the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he says. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes. An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time homebuyer tax credit became available. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,” Yun says. “By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.” According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5.00 percent in March from 5.13 percent in February; the rate was 5.97 percent in March 2008; data collection began in 1971. Record-high housing affordability conditions are helping markets recover as well, with home sales higher than a year ago in Minneapolis, Northern Virginia, Las Vegas, Phoenix and most areas of California and Florida.