MIAMI — Home sales in the South posted an annual increase of 8 percent in January as buyers grabbed hold of federal tax credits and affordable prices.
However, sales plummeted 35 percent from December, a sign that the housing market’s recovery may be on shaky ground.
The median sales price of previously owned homes was $140,200, a decrease of 2 percent from January last year, the National Association of Realtors reported Friday.
Nationally, there were 275,000 homes sold, a 33 percent decrease from December, but up 7 percent from year-ago levels, without adjusting for seasonal factors. The national median sales price was $164,700, unchanged from last January.
The year-over-year increase in the South was mainly driven by low prices, government incentives, and mortgage rates that have hovered near 5 percent. Homebuyers have until April 30 to take advantage of tax credits of up to $8,000 for first-time homebuyers and $6,500 for current homeowners.
Some analysts who expected rough winter weather to hurt sales were surprised at the annual increase.
“The bargains are so good that people were braving the rain, sleet, snow and frigid air to take advantage of them,” said Jeff Humphreys, an economist with the University of Georgia.
Still, job losses, falling consumer confidence, high foreclosures and tight lending standards remain obstacles for a sustained recovery.
“There’s a lot of underlying weakness in the world economy and national economy,” said Bill Weaver, real estate professor at the University of Central Florida. “That’s not the general economic environment in which people decide to go out and spend $200,000 on a house.”
In the South, nine of the 19 cities covered by the Associated Press-Re/Max Monthly Housing Report showed sales increases compared with last January. Median sales prices dropped in 10 Southern cities.
The AP-Re/Max report, also released Friday, analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.
Here are some highlights:
—Little Rock, Ark.: Sales fell 22 percent, the largest year-over-year drop in sales among the report’s 19 Southern metro areas.
A lack of confidence in the economy likely led Little Rock buyers and sellers to hold back, with job losses hitting close to home, said Ethan Nobles, spokesman for the Arkansas Realtors Association.
“When you’ve got regular announcements of job losses or very little job creation, that does make people a little bit nervous,” Nobles said.
Despite the drop in sales, the median sales price in Little Rock rose nearly 11 percent to $147,000.
—Orlando, Fla.: This central Florida city’s basement-level prices led to a 52 percent increase in sales compared with January last year. Orlando’s median sales price was $104,250, down 28 percent compared with the same month last year, the AP-Re/Max report showed.
Foreclosures sold at heavy discounts are keeping prices down and luring investors, especially in the condo market.
Condos can sell for $50,000 or even less, often for all-cash, said Lloyd Page, regional senior vice president with Coldwell Banker in central Florida. Even houses are selling for that little, though they are usually foreclosures in need of repairs, Page said.
“A lot of these houses are stripped bare and won’t qualify for financing,” Page said.
Coldwell Banker agent Cindy Brads said buyer interest is “tremendous” for homes $150,000 and below in Orlando. For anything below $60,000, it’s not strange to get 20 offers for a property, with a large percentage coming from investors, she said.
— Houston: This Texas metro area posted a 10 percent increase in its median sales price, which was $143,500, the AP-Re/Max report showed.
Sales for homes $500,000 and higher rose 40 percent compared with last January, said Danny Frank, an agent with Keller Williams Realty in nearby Pearland, Texas.
Houston has been one of the steadiest housing markets in the past year. But it isn’t immune to worries about the economy — sales fell 11 percent compared with last January.
Slow home sales also hurts local economies, cutting into sales of home-related items like refrigerators and lawnmowers.
“That trickle-down effect affects everybody from Joe the plumber to Joe the brain surgeon,” Frank said.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info