Existing-home sales last month were up almost 8 percent from July and home prices were up 9.5 percent from a year ago, to $187,400.
“More buyers are taking advantage of excellent housing affordability conditions,” NAR Chief Economist Lawrence Yun said in his national press conference today in Washington in which he released the latest home sales figures. “Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers. However, the West and Florida markets are experiencing inventory shortages, which are placing pressure on prices.”
Home prices are up partly because the mix of housing is shifting toward more normal sales, with distressed sales comprising a smaller share of the market. But prices are also up because of appreciation, which NAR data as well as other price indexes show. Case-Shiller and the Federal Housing Finance Agency both show prices up based on repeat sales, which track price changes without regard to changes in the sales mix.
The positive sales and price trends come despite lenders’ continued tight underwriting practices. Yun said these overly tight policies could pose problems five years down the road, since mainly households with strong incomes and good credit profiles are getting loans today. That means a few years down the road, as homes appreciate, households with less income and less strong credit profiles won’t have been able to take advantage of today’s low home prices and historically low interest rates. That would leave many responsible households that could be successful owners today unable to get on the home ownership ladder.
Forthcoming rules, such as the qualified mortgage (QM) rule, which the Consumer Financial Protection Bureau (CFPB) is writing to meet requirements in Wall Street reform legislation enacted two years ago, could exacerbate the problem, Yun said. NAR wants the rule to be flexible enough so lenders can make safe and affordable loans to responsible buyers, but there’s a concern that the rule could be too restrictive and only those with the best credit profile would be able to get affordable financing.
The video above is from Yun’s press conference today, September 19, in which he report’s August 2012 home sales numbers.