Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.
"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.
Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).
"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.
So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:
Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.
Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.
Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.
Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.
The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.
"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."
Source: “Rising home sales point to a recovery; Prices expected to keep falling 5% to 7% this year,” USA Today (April 21, 2011), “U.S. Home Sales Top Forecasts in March,” The New York Times (April 21, 2011), and “Rich People Buying Homes Again--Should You?” AOL Real Estate News (April 20, 2011)
