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Existing Home Sales Improve as Prices Drop

The recent real estate market trend shows an improvement in the sales of existing homes, which is hailed as a good sign of economic recovery. However, the fall in prices of residential properties across many parts of the country is causing worry for many experts.

According to a recently-released report, existing-home sales have increased by 2.7 percent in the first month of the current year. The rise is 5.3 percent more than the growth recorded in January 2010. Analysts believe that the phenomenon is a result of the constantly improving economy and increased job opportunities.

As of now the growth in the sale volume of existing residential structures is attributed primarily to the investors who have enough cash to make a purchase outright. The credit requirements are too tight for an average buyer to qualify for a mortgage. Even the falling prices are not helping as they do not have adequate cash in hand to initiate the buying process.

The home prices fell 3.9 percent in the fourth quarter, which is slightly less than the overall average for the year. According to a report, the home prices fell 4.1 percent during the year 2010. Experts believe that the drop in prices is due to the increased precedence of foreclosures and short sales. The prices may fall even more as the homes foreclosed by Fannie Mae and Freddie Mac will be made available for sale in time, analysts say.

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