Home sales nationally jumped 7.2% last month, the largest month-to-month increase in ten years, according to the National Association of Realtors. The 5.24 million sales exceeded analyst expectations of 5 million. The high sales velocity also help propel stocks higher.
While this is certainly welcome news for the real estate markets, and many sellers, there are a few caveats. First-time homebuyers, motivated by the $8,000 federal first time homebuyer tax credit, made up a third of all sales, and distressed sales and foreclosures made up another third. This indicates that the challenges faced by the national housing markets are not over. The tax credit is scheduled to expire December 1st and foreclosures continue to be high nationally, depressing traditional sales. Despite the rise in sales, inventories remained high as more homes came on the market. The inventory of unsold homes remained at 9.4 months. Sales prices were down year-over-year in every region of the country.
So what does this mean for residents of Houston, Spring, The Woodlands and Tomball, Texas? What we are seeing in Houston is alot of strength in the entry-level home market as many homes, especially foreclosures, are selling at or above asking price. Homes in the move-up and luxury segments are not enjoying the same level of demand so sellers in that part of the market should take the time to bring their homes to showcase condition and be prepared to price their homes aggressively. Buyers should not expect the deep discounts other parts of the country have seen as homes prices overall have not declined significantly in Houston and there is a far smaller percentage of highly leveraged homes in our area.
One additional piece of good news is that mortgage rates fell this past week and remain at historically attractive levels. 30-year fixed rate loans can be found for less than 5.25% right now in our area.
In the end, rational expectations will insure both buyers and sellers meet at a fair price.