A report on Monday that existing-home sales jumped 10% in September, signaling a sales recovery in the housing market, closely followed Federal Reserve Chairman Ben Bernanke's announcement that the Fed is actively supporting foreclosure prevention at the local level.
Completed existing-home transactions—which include single-family homes, townhomes, condominiums and co-ops—came to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, the National Association of Realtors (NAR) said in its report.
September 2010’s level remains 19.1% below the 5.60 million-unit pace in September 2009. However, first-time homebuyers last year were preparing for an initial tax-credit deadline in November, and this month’s 10% increase actually marks the early stages of recovery, according to NAR chief economist Lawrence Yun.
“A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” Yun said in a statement. “But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.”
Also on Monday, Bernanke spoke about the state of the U.S. housing market, suggesting that the troubled industry’s problems have been identified and that dubious underwriting practices and inappropriate mortgage products are now being corrected.
“We are looking intensively at the firms’ policies, procedures, and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Bernanke said in remarks before the Federal Reserve System and Federal Deposit Insurance Corp. conference on mortgage foreclosures and the future of housing in Arlington, Va.
In response to the fallout from the financial crisis, the Fed has helped stabilize the mortgage market and improve financial conditions more broadly, thus promoting economic recovery, Bernanke asserted.
“What may be less well known, however, is what the Fed has been doing at the local level,” he added. “As the foreclosure crisis has intensified, Federal Reserve staff in our research, community development, and supervision and regulation divisions have actively collaborated to support foreclosure prevention at the local level and promote neighborhood stabilization initiatives.”
Read about the NAR’s August report at AdvisorOne.com.