Saratoga News

Homes

The Real Deal

Lereah expects strong year

Sales of existing homes in the nation edged up in March following a strong rebound in February, according to the National Association of Realtors. Median home prices also continued to rise, but the comparison of nationwide prices to local prices continues to highlight Silicon Valley as one of the most expensive areas to live.

Total existing-home sales--including single-family, town- homes, condominiums and co-ops--rose 0.3 percent but were 0.7 percent below figures for March 2005.

David Lereah, the association's chief economist, said sales are leveling out. "It's a good sign to see home sales holding close to the level of a strong rebound in the month before," he said. "This is additional evidence that we're experiencing a soft landing. We may see some minor slowing in home sales as interest rates rise, but the market clearly is stabilizing."

Lereah expects 2006 to be the third-strongest year on record for home sales.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.32 percent in March, up from 6.25 percent in February; the rate was 5.93 percent in March 2005.

Although interest rates are climbing slightly, the Mortgage Bankers Association reported a jump of 8.8 percent in overall mortgage applications during the last week in April.

The national median existing-home price for all housing types was $218,000 in March, up 7.4 percent from March 2005 when the median was $203,000. The median is a typical market price where half of the homes sold for more and half sold for less. Historic price data has been revised back to 1989, including updates to reflect geographic changes over time, but price patterns are consistent with previously reported data.

"We now see appreciation cooling to single-digit rates of price growth--another sign that the market is normalizing," Lereah said.

Total housing inventory levels rose 7 percent at the end of March to 3.19 million existing homes available for sale.

The median price of a home in California in March was $561,350, and Santa Clara County reported a median home price of $760,000. The median price of a home in Los Gatos topped out at $1.3 million, while Saratoga's median home price was almost $1.4 million in March.

Existing-home sales are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales are based on a much larger sample--nearly 40 percent of multiple listing service data each month--and typically are not subject to large prior-month revisions.

The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to pcardus@silvar.org.