Existing Home Sales Rose in January - 2 yr High

According to an MSNBC article this morning, Sales of existing homes rose in January by the largest amount in two years. Does this mean the national housing slump is over?

The National Association of Realtors reported Tuesday that sales of previously owned homes rose by 3 percent last month, the biggest one-month increase since a 3.3 percent increase in January 2005, a time when housing was roaring toward the peak of its five-year boom.

According to the article on MSNBC, the median price of an existing home sold in January dropped to $210,600, a decline of 3.1 percent from a year ago. The January decline was the third-biggest drop in history.

Analysts said that the decline in prices was actually an encouraging sign that home sellers are starting to adjust their asking-price down and this should help speed the correction in housing.

More good news: sales rose the most in the West, up 5.6 percent, followed by gains of 4.8 percent in the Midwest and 2 percent in the South.

2006 New Home Sales dropped 17.3%

The Jan. 27th edition of the Oregonian had an article about the housing market. Yes the above head line is true . . . for nationwide real estate sales. New home sales fell in 2006 by the largest amount in some time, but they were actually up for a second straight month in December. Hopefully this means that the worst of the housing downturn is coming to an end. When you read the head line above, what do you think? Most stop at the head line and don't bother to read the rest of the article. Others fail to make the distinction between national stats and our local market activity or between NEW home sales and existing home sales.

So what is happening in our local market? On the new home front we see lots of inventory and lots of builder incentives to buyers. Many of the local builders are offering kitchen upgrades, free central air, and/or paying buyer's closing cost. Builders are trying to clear their backlog from 2006, plus get ready for a flat 2007. Some experts believe that 2007 will see a 14% drop in new home sales.

So it is a good time to be a buyer in the market for new construction. But if you have to sell your home in a development that is still building new homes, you may have a tough time. We have been on two listing appointments in the last week in which the sellers' main competition is the builder that is trying to sell off their unsold inventory. In both cases the builder is offering great incentives and pricing. So if you do buy new construction, make sure you can stay in the home for a while.