Homes sales up, prices down
That was the state of things in July and August at least through the Natural State. In northwest Arkansas, for example, 615 homes were sold in August – up 28.39 percent over 479 sales in the same month a year ago. Meanwhile, the average sales price in August was $157,894, down 10.14 percent from $175,714 in the same month last year.
In the central part of the state, there were 841 homes sold in August – up 22.77 percent from 685 sales in the same month last year. The average sales price was $162,189, down 3.93 percent from $168,815 in August 2009.
The obvious questions are these – what market dynamics are at work and what’s in store for housing markets throughout Arkansas?
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, said some expected market dynamics are at work. For one thing, prices were inflated a bit from April 2008 through June last year as the federal government offered tax credits to qualified home buyers.
The last round of credits provided up to $8,000 to first-time buyers and as much as $6,500 to repeat buyers. It seems that the prices of things increase when you pay people to buy them.
With those tax credits removed from the system, Deck observed there is no atypical influence from the federal government stimulating homes sales. That being the case, prices have dropped steadily over the past year.
While Deck said there is still a good amount of “fear” in the market, consumers are still tempted to take advantage of good deals. Current home prices do, indeed, represent bargains and consumers have responded to them. Add interest rates below 4.5 percent on 30-year mortgages and there are a good number of bargains to be had.
Deck said a few months of increased sales numbers could signal a stabilization in the housing market. Should sales stabilize, prices could follow suit and start to rise, too.
Bear in mind that few people are shouting about a pending housing market recovery. That’s no surprise seeing how many factors – some foreseen and some unforeseen – have hit housing markets over the past few years.
Still, the July and August reports have been encouraging. While sellers rarely like to see prices fall, the hard truth is a drop was necessary to get people buying homes again. Once sales improve consistently, prices will also improve and then we can talk about a market recovery.
When will that recovery take place? The outlook is a bit cloudy there as there are still a lot of factors to consider, such as a foreclosure rate that remains high and questions about when the unemployment rate will start to drop.
Still, it’s a good sign that homes are selling and there are enough motivated buyers in the market to grab some bargains while they last.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.