Dees Stribling, Contributing Editor
Washington, D.C.–Since the expiration of the federal home sales tax credit earlier this year, sales of all kinds of residential property have been near catatonic, but recent numbers from the National Association of Realtors (NAR) suggest that a modest uptick in home sales might be in the offing in the near future. Condos, however, might not benefit from the uptick, depending on the market.
Overall, the organization said that its Pending Home Sales Index, which is a forward-looking indicator, rose 4.3 percent to 82.3 based on contracts signed in August from a downwardly revised 78.9 in July. The index is still 20.1 percent below August 2009, when it was 103.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months, and does not distinguish between single-family and multifamily properties.
Yet condo markets seem to be in a weaker position, in terms of future sales, than single-family houses. According to NAR, the inventory of condos is currently higher than that of single-family houses. The nationwide supply of condos is 13.9 months, compared with 11.3 months for single-family. That said, conditions vary widely and some markets—such as South Florida—are so over-supplied with condos that they even distort the national picture.
The relative high supply has also affected prices, notes the organization. The median U.S. condo price in August was down 2.8 percent from a year ago, while single-family prices were up 1.2 percent. Thus the condo market will probably be longer in recovering than single-family, again with regional variations.
Still, it’s going to be a slow sales recovery for all kinds of residential properties in all parts of the country. That will probably be the case regardless of the latest Pending Home Sales Index, which showed a considerably larger increase in pending sales in the West and South than the Northeast and Midwest during August.
“I wouldn’t read too much in the regional monthly changes in pending home sales – the trend will be a gradual but not even improvement, with some regions down in some months,” a spokesman for the NAR tells MHN. “The underlying trend is that contract activity is down by double-digit amounts in all regions in comparison with a year ago, when first-time buyers were ramping up to take advantage of the tax credit in advance of the initial Nov. 30, 2009, deadline.”