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Arkansas home sales show 6% October gain

Average price is up 7.8% from year ago

By DEMOCRAT-GAZETTE STAFF AND WIRE REPORTS

This article was published November 28, 2012 at 4:01 a.m.

— Sales of new and previously owned homes in Arkansas rose almost 6 percent in October compared with the same month last year, the Arkansas Realtors Association said Tuesday.

Home prices in the state also rose at a healthy pace in October. The average home price last month was more than $157,200, up 7.8 percent from October 2011.

For the first 10 months of the year, the average home price was about $155,500, up more than 10 percent compared with the first 10 months of 2011.

Rising home prices in Arkansas parallel data in the Standard & Poor’s/Case-Shiller home-price report, also released Tuesday. The monthly 20-city index of home prices rose 3 percent in September compared with the same month last year. Prices also gained 3.6 percent in the July-September quarter compared with the same quarter in 2011.

There were 1,936 houses sold in Arkansas last month, up from 1,829 in October last year. The report covers home sales in 43 of Arkansas’ 75 counties and includes the state’s largest population areas.

The increase was the first time that sales improved since June, when they were up almost 9 percent compared with June 2011.

But a closer look at the October numbers indicates that the rally in sales was not as positive as it seemed, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

Coupling home sales in September and October revealed that the two-month change was less than a 1 percent gain over the same two months last year, Pakko said. Last year, there was a sharp drop in home sales in September but a strong gain in October, Pakko said.

“I think it really has to do with the timing of when the closings take place,” Pakko said.

Sales in 16 of the 43 counties covered by the Realtors Association’s survey were up by double digits in October. Of the 10 counties with the most sales, six saw doubledigit sales increases.

Sales were up almost 14 percent in Pulaski County, almost 19 percent in Benton County and almost 11 percent in Washington County.

Scott McElmurry, chief operating officer of Bank of Little Rock Mortgage, said mortgages on home purchases were up about 18 percent last month for his firm.

“We’re not out of the woods; we’re not back in a great market,” McElmurry said. “But at least seeing the increased activity, we’re certainly optimistic.”

October is traditionally a busy month for Bank of Little Rock Mortgage, McElmurry said. November traditionally is not as active as October, but November mortgages on home sales are almost equal to October, he said.

There has been no discernible trend in home sales for the year, Pakko said.

For the first 10 months of the year, home sales are still down about 500, or about 2.4 percent, compared with the same months in 2011.

“Last year was the slowest sales pace we’ve seen in the last five or six years,” Pakko said.

In 2009 and 2010, after the recession, sales were propped up by the federal homebuyer tax-credit program. Last year was the first year that was unaffected by the federal program, Pakko said.

Across the nation, prices increased in 18 of 20 cities over the 12-month period surveyed in the Standard & Poor’s/Case-Shiller index. In Phoenix, prices jumped 20.4 percent over that stretch to lead all cities. Prices in Atlanta showed a modest 0.1 percent increase, ending 26 straight consecutive yearover-year declines.

Prices also rose in September from August in 13 cities. Five metropolitan regions posted declines, while two were unchanged.

In Las Vegas, one of the hardest hit during the housing crisis, prices increased 1.4 percent — the biggest monthover-month gain. Prices rose 1.1 percent in Phoenix and Minneapolis. The sharpest decline was in Cleveland, where prices fell 0.9 percent.

Monthly prices are not seasonally adjusted, so some of the declines may signal the end of the summer buying period.

David M. Blitzer, chairman of the Case-Shiller index, said that when adjusting for seasonal factors, only one city showed a decline in September versus two in August. “Despite the seasons, housing continues to improve,” Blitzer said.

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The September figures are the latest available.

Steady increases in home prices have helped drive a modest recovery in the housing market. Rising prices encourage more potential buyers to step off the sidelines and purchase homes. And more people may put their homes on the market as they gain confidence that they can sell at a good price.

Higher home prices can also make homeowners feel wealthier and more likely to spend more. Consumer spending accounts for about 70 percent of the U.S. economy.

A big reason for the rebound is that the excess supply of homes that built up before the housing crisis has finally thinned out. The number of previously occupied homes available for sale has fallen to a 10-year low. The inventory of new homes is also near the lowest level since 1963.

At the same time, more people are looking to buy or rent homes after living with relatives or friends during and immediately after the recession.

Those trends are also pushing up home sales and construction. Sales of previously owned homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when the homebuyer taxcredit boosted purchases.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in 6 1/2 years this month. And builders broke ground on new houses and apartments at the fastest pace in more than four years last month.

Information for this article was contributed by David Smith of the Arkansas Democrat-Gazette and Christopher S. Rugaber of The Associated Press.

Front Section, Pages 1 on 11/28/2012

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