In spite of all news stories, almost five and a half million homes sold (seasonally adjusted, annualized) in the third quarter of 2007. Why?

For most people, housing is a long-term investment with both financial and non-financial rewards. The financial gains have been, and will continue to be, an influence on the desirability of owning a home. For those who have owned a home for several years, equity gains have been substantial and have contributed to growing household wealth.

But however significant the financial motivations for homeownership, buyers routinely point to other reasons – such as their desire to own a home or establish a household, and lifestyle considerations such as a growing family or retirement – as driving factors in their home purchase decision. Home buying has a social benefit as well: most people buy homes in order to be a homeowner, to live in those homes, and to be part of the communities in which those homes are located, to be closer to schools or jobs, because of change in employment or family situation, or for retirement.

An additional 12 percent of all home buyers indicated that their primary reason for buying was a job-related relocation or move, with another 12 percent wanting a larger home. Repeat buyers were most likely to report that they purchased their home because of a job-related relocation or their desire for a larger home.

As the housing market cooled in 2006 and prices dropped, in some markets precipitously, the "attraction" of buying multiple properties to flip lost its luster, which, in part accounts for fewer home sales in 2007.

Type and Location of Homes Purchased
Detached single-family homes dominate the market. Overall, about three-quarters of recent home sales were detached single-family homes. Townhouse/row houses and apartment/condominiums in buildings with five or more units both accounted for 9 percent of home sales; and duplex/apartment/ condos in two-to-four unit buildings comprised 2 percent of the sales.

Fifty-six percent of recent home sales occurred in suburban areas. This percentage varies distinctly across regions, from 43 percent in the Northeast to 63 percent in the South, mainly because of the urban-suburban composition of the regions. Buyers in the Northeast more often purchased a home in a small town or rural area than buyers elsewhere. Buyers in the West were more likely to purchase a home in an urban area or central city.

Neighborhoods matter: The quality of the neighborhood – characterized as the level of upkeep and appeal of the neighborhood and surrounding areas – continues to be ranked as the most important factor of neighborhood choice by 65 percent of recent home buyers in this year's survey. Convenience to the home buyer’s job was ranked as the second most important feature when choosing a neighborhood, followed by overall affordability of homes in the area and convenience to friends and family.



Size of Home Purchased
The typical home purchased was 1,810 square feet. First-time buyers typically purchased smaller homes (1,510 square feet), mainly because they are more likely to purchase condos or townhouses. Repeat buyers purchased somewhat larger homes, with a median size of 2,015 square feet.

Down the Road
Housing market conditions will vary regionally with employment rates, new job growth and household formations. Mortgage interest rates remain near generational lows, and short of some unexpected shock to the economy, are expected to remain favorable over the near-term. These fundamentals will continue to support home buying and drive the decision of many consumers to purchase “a home of one’s own.”