A recent report from the National Association of Realtors noted that residential home prices continued to decline across the country during the third quarter, but this has not stopped an increase in home sales.
In total, 111 metropolitan statistical areas witnessed declines during the third quarter, while 39 MSAs had home price gains, the NAR said. This is slightly lower when compared to the second quarter, during which 41 out of a total 150 MSAs witnessed improvements. Total home sales stayed near stagnant when compared to the second quarter - dropping only 0.1 percent - but had a significant gain of 17 percent year-over-year. This puts the seasonally adjusted annual rate at 4.880 million for the third quarter.
"Home sales need to recover first - only then can prices stabilize," said Lawrence Yun, chief economist for NAR. "Existing-home sales are little changed from the second quarter but are notably higher than a year ago. The good news is inventory levels have been trending gradually down."
The increase of home sales may be due to the continuance of low mortgage rates, as well as low home prices across the country. This situation may also signal a jump in consumer confidence compared to 2010.