There is been a lot more good news on the housing markets which, in turn, has had a very positive affect on the stock market, as investors see signs that the U. S. housing market is stabilizing. Last week the National Association of Realtors reported that sales of resale homes increased 7.2% in July from a month earlier. This monthly increase was the largest since 1999 and marked the fourth monthly rise in a row. Perhaps even more importantly, the July sales were up 5% from July last year, the first gain from the year-earlier level since November 2005.

Sales have improved thanks to the $8,000 federal tax credit for first time home buyers, mortgage rates that are near 50-year lows and the expanded mission of the Federal Housing Administration which guarantees mortgages with down payments as low as 3.5%.

The resale home report was followed on August 26^th with news from the Commerce Department that new homes sales were up 9.6% in July compared to June and rising for the fourth straight month. More good news for builders is that the inventory of new homes for sale has dropped to a 7.5 month supply as builders have scaled back on construction to the point where supply and demand are coming into balance.

These reports have helped the Dow Jones Industrial average post gains in six of the last seven weeks and the average is now close to 20% higher than it was on July 10, 2009.

Unfortunately for home owners, the increase in sales has come with a decrease in selling price. The July median price for resale homes was $178,400 down 15% from a year ago and the median sales price of a new home was $210,100 down 11.5% from July, 2008. From its peak in 2006, the Federal Reserve estimates that the total market value of U. S. homes fell 18% from $21.9 trillion to $17.9 trillion through March 31, 2009, a loss of $13,000 per person. The Fed also estimates that homeowner’s equity has declined 40% from the peak and now accounts for just 41.4% of real estate values. By comparison, after the last slump in the 1990’s, home equity levels remained in the high 50’s.

Home pricing has received some positive news as the rate of drop in values has leveled off and is improving. On August 26, 2009 the Case-Shiller Home Price Index report for the second quarter showed a decrease of 14.9% which was an improvement on the 19.1% drop reported in the first quarter. The Federal Housing Finance Agency second quarter report showed housing prices down 6.1% compared to the second quarter last year. This compares to a decrease of 7.1% in the first quarter. The Fort Collins / Loveland area continued to move up the ladder from 93 in the first quarter to 89 of 292 Metropolitan Statistical Areas and the state improved to eleventh position from thirteenth in the last report.

The local year to date price decrease, based on closed sales, is 3.2% so this area is holding up far better than most and the recent improvement in sales – July volume was the best in over a year – would seem to indicate we are on the way up. Our next local sales report due in two weeks will cover sales to the end of August, typically the last big volume month of the year. Hopefully we will continue to see the market strengthen.

On a final note, Fort Collins hit the national headlines again last week when BusinessWeek magazine ranked Fort Collins number 19 on the list of the top 30 housing markets in the United States. “Fort Collins, home to Colorado State University, has excellent schools, low crime and a vibrant downtown known as Old Town. It has miles of hiking and biking trails, 600 acres of parks and 5,000 acres of natural areas,” the magazine said. Good for us!

Local real estate home sales seem to be picking up. Closed sales in July were up 4.2% over last year and 8.7% over last month. The 374 sales were the best month since June of last year and the 8.7% increase over June compares to a 12.7% drop last year from June to July. Plus, the 4.2% monthly increase is the first since August 2007 – interrupting a string of twenty two consecutive monthly sales decreases and sales have improved each month for the last five months.

Pricing is a bit of a different story with an average selling price in July of $237,698, a drop of 4.7% from last year. There is also a correction in the June average selling price which was reported at $237,527 and should have been $229,919. This has moved the year to date average selling price to $242,255, a 3.2% decrease from last year. One of the items affecting the average price is the lack of new construction which typically is at a higher price than resale homes. For the year to date there is a 27.4% drop in the sales of new single family homes at an average price of $381,156. This compares to a 14.5% drop in resale homes at an average price of $252,074. The other issue is the general decline in homes sold above $600,000. This year, sales of homes in this price range are 2.1% of the total homes sold compared to 3.2 last year, a drop of 35%. The median price reflects this disparity in the sales of higher priced homes as it stands at $210,000 for the year, which is exactly even with last year.

The days on market for the July closed sales improved to 101 days compared to 108 days last month and 103 days last year. The inventory of homes for sale also declined slightly to 1,995 active listings compared to 2,006 at the end of June and 2,033 last year.

Sales to the end of July are typically 65% of the annual activity which means we are on a pace for about 2,600 closed sales compared to 3,121 last year and off well over a third from the peak years of 2004 and 2005.

In other areas, July sales in the Denver metro area were up 6.1% from June but down 13.3% from last year and the median price decreased to $229,900 in July compared to $237,500 in June and up slightly from $229,200 in July 2008. July sales in the Loveland area also are improving and were up 18.9% compared to last year. For the year to date sales are off 12.9% and the average price is down 9.3% to $236,055. In Weld County, July sales were down 13% and are off 7.8% for the year to date while the average selling price is 7.7% lower at $179,978.

The National Association of Realtors just reported on national second quarter sales which were up 3.8% compared to the first quarter but a 2.9% decrease from the second quarter last year. The national median home price for resale homes was $174,100 in the second quarter, 15.6% lower than the same period last year. “This data suggests that the recovery is broadening,” says Lawrence Yun, chief economist with HAR. “Low interest rates and the first time home buyer tax credit are beginning to pull buyers back into the market.”

However, a word to the wise. If you are a first time home buyer intending to take advantage of the $8,000 tax credit, you need to get moving. This credit is due to expire at the end of November which is only about one hundred days from now. With new financing and appraisal regulations, you need to allow 45 to 60 days to close a purchase – from the time you are under contract – and there could be a real push to get in under the wire so the end of November, coupled with the Thanksgiving holiday could be busy. Better to have a contract closing earlier in November which means you need to find a home and have an acceptable offer / contract done in the next thirty days!