August recorded higher house sales and steadily increasing prices in 52 metropolitan areas, making this year’s home selling season a strong one, according to the August RE/Max Housing Report.
While home prices in July were 6.3 percent higher compared to last year, home sales increased 8.5 percent from the mark set last year. However, what remains a serious challenge to the recovery of housing sector is low inventory, which was 29.7 percent below August 2011.
The report showed that bidding wars in some areas have led to buyers finding it difficult to find their dream home. This can affect the sales numbers negatively, experts feel.
"As we move from summer to fall it's very encouraging that this year's home selling season began strong and finished even stronger," said Margaret Kelly, CEO of RE/MAX, LLC. "Nearly every month in 2012 experienced increased sales and prices over 2011, showing that we have definitely passed the bottom and we're looking forward to 2013 being an even better year."
Jennifer Lee, Senior economist, BMO Capital Markets, agrees that U.S. housing market will improve in 2013. A stabilization of prices is expected with demand improving on firmer job growth and easier lending standards, she said.
Lee explained that price increase is due to a pick-up in demand for housing and due to decreased distressed homes on the market.
Historically low interest rates are another reason for a buoyant market, points out the RE/MAX report. Of the 52 metros that were surveyed in August, 44 saw higher sales than previous year. Similarly, in the median price front, 46 metros reported price increase over last year’s numbers.
Meanwhile, the days on market, too, has been reducing in many markets due to low inventory. Though this has increased in the escalation of prices, low inventory is limiting sales, believes experts. According to the report, low supply continues to plagues the metros of San Francisco, Los Angeles, Denver, Orlando, Des Moines, Washington, San Diego, and Miami.
The average month’s supply is two months lower than what it was last year. It has dropped from 6.8 to 4.9.
