NAR Foresees Increase in Home, Condo Sales by Summer as a Result of Very Favorable Buying Conditions; Inventory is Almost Back to Normal

By Anuradha Kher, Online News EditorWashington, D.C.–Existing-home sales declined in January with some buyers waiting to see how details of the economic stimulus package would affect them, according to the National Association of Realtors. At the same time, inventories fell to a two-year low.Lawrence Yun, NAR chief economist, says there was understandable hesitation by some homebuyers. “Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus,” he says. Existing-home sales–including single-family, townhomes, condominiums and co-ops – fell 5.3 percent to a seasonally adjusted annual rate1 of 4.49 million units in January from a level of 4.74 million units in December, and are 8.6 percent lower the 4.91 million-unit pace in January 2008. Meanwhile, existing condominium and co-op sales dropped 10.2 percent to a seasonally adjusted annual rate of 440,000 units in January from 490,000 units in December, and are 20.3 percent lower than the 552,000-unit level a year ago. The median existing condo price was $174,400 in January, down 20.6 percent from January 2008. “Multifamily is taking a bigger hit than single-family,” Jed Smith, managing director of quantitative research, tells MHN. “The good news is that inventory has dropped by about 7.5 on a yearly basis. The supply has decreased by about a month.”NAR believes the housing market will soon get a lift from very favorable buying conditions – not only from improved affordability, but also from the stimulus of an $8,000 first-time home buyer tax credit, and higher conforming loan limits that will allow more people to tap into 50-year low mortgage rates.“We estimate there will be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package,” says Smith. Inventory is expected to fall below an eight-month supply by the year-end, which would be consistent with home price stabilization, according to NAR estimates. “Of this 900,000, we expect about 10 percent to be condos. It will be higher in regions where condos are a primary first-time homebuyer market,” adds Smith. He also believes there will be an uptick in sales, due to improved conditions, by the summer. (Click here to read our coverage of NAR’s fourth quarter 2008 report.)