Yes Virginia, it is good news.
It was announced Tuesday by NAR (National Association of Realtors) that sales of existing homes increased again in May, the first back-to-back monthly gain since September 2005.
Why?
Just a guess, but certainly increased affordability due to lower prices and the federal first-time buyer tax credit have been evident in our market.
According to NAR, nationally, existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent but remained 3.6 percent below the 4.95 million-unit pace in May 2008. Regionally, existing-home sales in the Northeast rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago. The median price in the Northeast was $243,600, which is 12.5 percent below May 2008.
Locally, Monmouth County single-family home sales rose 23% in May, but is down 18% from last year. The median price for a single-family home Monmouth County was $387,500, down 14% from May 2008.
But with the glimmer of hopeful news came some negative news as well regarding the housing recovery. Due to changes in lender requirements, appraisals are more and more frequently souring the deal. Lawrence Yun, NAR chief economist, said the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.” I myself recently heard of a transaction where the appraiser came from Delaware... not exactly someone familiar with the local market.
So... let's hope the encouraging news is a positive signs of things to come. The increase was less than what was expected so it is not surprising that it was less than enthusiastically received. Nevertheless, in my opinion, good news is still good news. Let's see what happens next month!
