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Home > News and Opinion > Home Sales In U.S Expected To Hit Record High After 5 Years

Home Sales In U.S Expected To Hit Record High After 5 Years

George Sterling | Wednesday, September 19th, 2012

Sales of current condominiums and single family homes surpassed analysts’ expectations for the month of August. The sales rose to their highest level since May 2010.

Previously, housing sales in May 2010 were boosted temporarily due to government’s buyer tax credit but this time it is being argued that the reason for soaring sales is record low mortgage rates.

Even when the average rates on 30-year fix sitting is around 3.6%, nearly one third of the homes sold in August were acquired by buyers through cash which reveals that average rates didn’t impact buyers’ decisions as much as they were expected to.

On the other hand, according to a survey conducted by Mortgage Bankers Association, applications for purchasing a home dropped by 4 percent last week, even with record low mortgage rates.

Lawrence Yun, chief economist of National Association of Realtors’ said the increasing sales of houses, even when qualifying for a mortgage is difficult, is a testament to the demand of houses that has accumulated in the past 5 years.

The current year seems to be a good one for the housing market and realtors are very confident that home sales for the entire 2012 period will hit a 5 year high. Their confidence is based on the fact that home sales increased by 7.8% from July to August. However, realtors warn that there are still many frictions in the market right now, with nearly 12 million borrowers who are unable to pay their mortgages due to higher mortgage owed than the actual worth of their homes.

Peter Bookvar of Miller Tabak said that the housing market is recovering sustainably but one should not forget the impact that the 2008 financial recession had on the housing market. According to Bookvar, housing sales are now back to where they were in 1998, before the recession.

The current sales level of houses resides at 4.30mm, which is the same as it was in 1998, but it is still low compared to 6.34mm of September 2005.

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