Economy continues to hinder local home sales
Home sales continued a four-month slump in October, with historically low interest rates unable to overcome the negatives of tight credit and a slow economy.
In Northwest Indiana, sales of existing single-family homes were down 29.9 percent from October 2009 and down 4.8 percent from this past September, according to data from the Greater Northwest Indiana Association of Realtors.
Realtors started bracing for a second-half decline earlier this year when they saw the looming deadlines for the final expiration of federal homebuyer tax credits in June, said Gene Ayers, of Ayers Realtors in Gary’s Miller Beach neighborhood. Now, the uncertain economy also is holding back sales.
“I find people are just having a hard time pulling the trigger,” Ayers said. “More than is normal, I think people are just hesitant because of the whole situation.”
Still, Ayers expects 2010 sales at his agency to be slightly ahead of those in 2009. That will include some sales of lakefront property, which was a nonexistent market in 2009.
Nationally, sales of existing single-family homes dropped 25.6 percent from one year ago and 2 percent from the year before, according to figures from the National Association of Realtors.
The drop from last year was so steep in part because sales last October were lifted by the initial expiration of the first-time homebuyer tax credit, with would-be buyers rushing to sign purchase agreements before the benefit was scheduled to end, said Lawrence Yun, chief economist for the National Association of Realtors.
“The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales,” Yun said.
Nevertheless, sales activity is clearly off the bottom and attempting to settle back to normal, sustainable levels, Yun said.
Yun and others acknowledge sales are getting some help from record-low interest rates, although that is offset some by tighter lending standards.
Ayers said anyone waiting for a further drop in home prices before buying ought to think twice about it because interest rates eventually will be going up. For example, even a 1 percent rise in interest rates on a $120,000 loan would hike a buyer’s total payments over the life of the loan by more than $24,000.
The average interest rate on a 30-year fixed conventional mortgage fell to 4.23 percent in October from 4.35 percent in September, according to Freddie Mac’s Primary Mortgage Market Survey. That is the lowest one-month average recorded in the history of the survey.
In Northwest Indiana, the median sales price of an existing single-family home was $125,000 in October, which was 3.8 percent below a year ago, according to the Greater Northwest Indiana Association of Realtors.
NWI Indiana home sales decline
Lake County existing single-family homes sold
October 2010: 286
October 2009: 450
Porter County existing single-family homes sold
October 2010: 105
October 2009: 161
Source: Greater Northwest Indiana Association of Realtors