WASHINGTON -- Home resales surged nationally last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.
Those trends were also reflected in local November home sales, which increased slightly from last month but almost doubled from November of 2008.
"My guess is we're probably going to see increased activity into the first quarter of next year," said Kim Pontius, executive vice president of the Traverse Area Association of Realtors. Home sales in TAAR's 5-county service area totaled 209 in November. That's up less than one percent from October, but it's up in a month where the local real estate market is typically slowing down, Pontius said. It's also a 90 percent increase from the 110 home sales recorded last November.
"We've seen the bottom," Pontius said. "It looks like it's going to start moving up from here."
Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress decided to extend and expand the credit to ensure the housing market could sustain its recovery.
"Things are stabilizing," said Pete Flint, chief executive of real estate Web site Trulia.com. "There is a significant amount of buyer interest out there."
About 2 million homebuyers have taken advantage of the credit so far, the National Association of Realtors said Tuesday. The group forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record jump.
"In the short run, its an effective stimulus," said John Ryding, chief economist at RDQ Economics. "If you give someone money to spend on something, they will spend it."
November's sales rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million, from a downwardly revised pace of 6.09 million in October, the Realtors group said. It was the highest level since February 2007. Sales had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.
Sales are now up 46 percent from the bottom in January, but down 10 percent from the peak more than four years ago. The inventory of unsold homes on the market fell about 1 percent to 3.5 million. That's a healthy 6.5 month supply at the current sales pace, the lowest level in three years.
The median sales price was $172,600, down 4.3 percent from a year earlier, and up 0.2 percent from October. Local sales prices also continue to lag because of short sales and foreclosed properties working through the market, Pontius said. The local median sales price in November dipped to $130,000, down around 3.7 percent from October and a drop of more than 13 percent from one year ago.
The housing market recovery, however, is still facing strong headwinds.
Unemployment is high and employers are going to be slow to rehire because economic growth is weaker than expected. The economy grew at a pace of 2.2 percent in the third quarter, which was lower than the initial 2.8 percent reading, the government said Tuesday.
What's more, mortgage defaults are still setting records, and lenders are regularly rejecting applications from borrowers who don't have good credit or enough money for a down payment.
Many experts warn that hundreds of thousands of foreclosed properties have yet to be put up for sale. Plenty of traditional sellers are also keeping their homes off the market, hoping for a better price.
"When they start thinking they can sell them, we could see a surge in homes for sale," wrote Joel Naroff, president of Naroff Economic Advisors.
In the meantime, home buyers can take advantage of record-low mortgage rates, deeply discounted prices and federal incentives. Besides the existing tax credit of up to $8,000 for first-time buyers, homeowners who have lived in their current properties for at least five years can now claim a tax credit of up to $6,500 if they relocate. To qualify, buyers must sign a purchase agreement by April 30.