Bargain Hunters Emerge in Housing

Existing home sales climbed for the first time in seven months as bargain hunters began to take advantage of sharply falling home prices. Home sales in February increased 2.9% from January’s numbers, according to a report by the National Association of Realtors. However, year over year sales were still down 24% while the prices of the homes for sale continue to plummet.

Prices that fell some 8.2% in February alone - the largest drop in record - improved affordability for many people. Others feel that home prices will only continue to drop and are still on the sidelines awaiting even lower prices. Regardless, the move does represent a ground floor in sight as home prices continue their fall off the proverbial cliff as demand has clearly arisen at these levels.

A broader recover, however, will likely depend on lenders loosening their lending standards and lowering interest rates on mortgages to make housing even more affordable. These lenders have retained high interest rates despite moves by the Federal Reserve to make lending cheaper, which has led to a standstill that continues to persist. In fact, the average 30-year mortgage rate was up to 5.92% in February compared to 5.76% in January, according to Freddie Mac.

In the end, a bottom in the real estate market is now in sight but prices continue to fall faster than ever before on their way down. Whether or not the bargain hunters continue to step in remains to be seen, but the housing market is now at least showing some signs of stabilization.

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