Every few months for the past couple of years, I've made it a point to update you on the state of the housing market. I feel it's essential to do so because …
• You may be buying, selling, or holding a primary residence or vacation home.
• You probably have a mortgage, and maybe a home equity loan.
• And you're probably concerned about the broader economy, which the housing and mortgage markets significantly impact.
So where do we stand now?
Well, the stabilization and very mild recovery I first told you was coming back in the spring, continues apace. Sales have generally been picking up. The supply of homes for sale has generally been falling. And prices, while still weak and falling, are not falling as quickly.
The real question is: What happens when the mammoth support that the government is throwing at the market ends?
Used Home Market
Finding Its Footing
I'll start with the existing home figures, since that's the most important part of the market. Most of us own "used" homes and sales of such homes account for around 75 percent to 85 percent of overall transactions in any given month. The latest:
* Sales surged 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from 5.09 million in August. That was twice the gain that was expected, and it left sales running at the highest level since July 2007.
* Single-family sales gained 9.4 percent, while condo and cooperative sales rose 9.7 percent. By region, sales climbed across the board, with the Northeast bringing up the rear at +4.4 percent and the West leading at +13 percent.
* Better yet, the raw number of homes for sale dropped 7.5 percent to 3.63 million units from 3.92 million in August. Supply was down 15 percent from a year earlier. That helped push the "month's supply at current sales pace" indicator of inventory down to 7.8 from 9.3. That's still higher than the 5-6 month range that's considered "normal." But it's a significant improvement from the double-digit readings we were seeing.
* Pricing is still weak, with the median price of an existing home down 8.5 percent year-over-year to $174,900. But as any good housing analyst will tell you: Pricing lags sales and supply.
Indeed, if you recall what I said in my May 8, Money and Markets column:
"I still believe home prices have further downside. That's because we remain oversupplied, with approximately 1 million excess housing units for sale in this country. More foreclosure inventory will likely hit the markets in the coming months, too.
