Posts Tagged ‘existing home sales’

The National Association of Realtors today released Existing Home Sales data for February 2011

Existing Home Sales report on the number of completed real estate sales transactions on single-family homes, townhomes, condominiums and co-ops. The methodology in calculating existing-home sales statistics is really quite simple. Each month the National Association of Realtor® receives data on existing-home sales from local associations/boards and multiple listing services (MLS) nationwide.  The monthly EHS economic indicator is based on a representative sample of 160 Boards/MLSs. NAR captures 30-40% of all existing-home sale transactions with its monthly survey.

HERE is the methodology for the data collection

Reuters Quick Recap...

RTRS-US FEB EXISTING HOME SALES 4.88 MLN UNIT ANNUAL RATE (CONS 5.15 MLN) VS JAN 5.40 MLN (PRV 5.36 MLN)-NAR
RTRS-US FEB EXISTING HOME SALES -9.6 PCT (CONS -4.0 PCT) VS JAN +3.4 PCT (PREV +2.7 PCT)-NAR
RTRS-US FEB INVENTORY OF HOMES FOR SALE +3.5 PCT TO 3.488 MLN UNITS, 8.6 MONTHS' SUPPLY-NAR
RTRS-US FEB NATIONAL MEDIAN PRICE FOR EXISTING HOMES $156,100, -5.2 PCT FROM FEB 2010-NAR
RTRS-US NAR SAYS 39 PCT OF U.S. FEB EXISTING HOME SALES WERE DISTRESSED SALES, HIGHEST SINCE APRIL 2009, VERSUS 37 PCT IN JAN
RTRS-US FEB EXISTING HOME SALES MEDIAN PRICE LOWEST SINCE APRIL 2002

Lawrence Yun NAR chief economist, expects an uneven recovery.  “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said.  “This tug and pull is causing a gradual but uneven recovery.  Existing-home sales remain 26.4 percent above the cyclical low last July.”

All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010.  Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010.  The balance of sales were to repeat buyers.  A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.

Distressed homes – sold at discount – accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010.  “The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun explained.  “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

Plain and Simple: 33% of existing home sales in February were covered with cold, hard cash. 39% of all sales were distressed inventory. This indicates folks are looking for bargains before the spring/summer buying season gets underway. Adding some optimism to the home buying outlook, we're hearing from loan originators that purchase applications are on the rise with most settlements not scheduled until April and May.  Unfortunately, on the whole, optimism is tempered by tighter underwriting standards and weak consumer credit profiles.  This is old news though. It's not only hurting home buying demand, it's preventing many folks from refinancing into a lower monthly payment as well. There's a lot of borrowers out there who just can't qualify for an agency-backed loan.  Anyone know of a better alternative besides cash? We don't....

CASH IS KING

...(read more)

The National Association of Realtors today released the Pending Home Sales Index for January.

The Pending Home Sales index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Instead, when a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Once that transaction settles it becomes an Existing Home Sale.  The majority of pending home sales become Existing Home Sales transactions, typically one to two-months later.

Since pending home sales measure actual existing-home sales, the PHSI provides an accurate and reliable indicator of future home sales activity. Samples show that about 80% of all pending home sales go to settlement within a 2-month time-period (and a significant share of the rest close in month 3 and month 4). Not all pending home sales go to closing though. A certain percentage of properties that go under contract are cancelled (or fallout) before ever going to settlement. This percentage has been on the rise since early 2009.  An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed.

Here is the Reuter's Quick Recap...

28Feb11 RTRS-U.S. JAN PENDING HOME SALES INDEX -2.8 PCT (CONSENSUS -2.2 PCT) TO 88.9 - REALTORS
28Feb11 RTRS-U.S. JAN PENDING HOME SALES -1.5 PCT FROM JAN 2010
28Feb11 RTRS-TABLE-U.S. Jan pending home sales fall 2.8 pct

Plain and Simple: -2.8%. Basically flat just above record lows on a year over year basis. Remember: the purchase market slowed considerably last winter.

“While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes   that need to go through the system,” Yun said. “We should not expect the recovery to be in a straight upward path – it will zig-zag at times.”

(WHY POINT THE FINGER NAR? REALTORS PLAYED NO PART IN THE HOUSING CRISIS?)

...(read more)

The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above year-ago levels, according to the National Association of REALTORS®.

Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”

Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010.

All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.  All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.

 

...(read more)

The National Association of Realtors released the Pending Home Sales Index for November today. NAR's Pending Home Sales Index measures the number of home purchase contracts that were signed in the monthly reporting period. Once "pending" sales contracts are closed, they are considered an Existing Home Sale. Because the Pending Home Sales index tells us how many contracts were signed, it is considered a forward indicator of Existing Home Sales. A signed contract is not counted as an Existing Home Sale until the transaction actually closes. Excerpts from the Release... Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of Realtors®. The Pending Home Sales Index, a forward...(read more)

I am generally amused at the market soothsayers who continually predict that the housing recovery is right around the corner. I suppose that all the years I have spent in the housing “ditch” have caused me to become oblivious to the information the experts use to make their predictions. I guess I could take a “let’s wait and see” attitude, but in the meantime consider the following. Let’s begin with housing starts, which are currently on an annualized run rate of approximately 550,000 new starts. This represents less than half of what is needed in a normal market. Existing home sales declined 2.2% in October and are currently tracking at an annual rate of 4.43 million. Then there are the foreclosures. According to RealtyTrac, 25% of home sales in the 3rd...(read more)

Embedded in the release of Existing Home Sales data yesterday was an update on the number of previously owned homes currently for sale on the market. From the Release... "Total housing inventory at the end of October fell 3.4 percent to 3.86 million existing homes available for sale, which represents a 10.5-month supply at the current sales pace, down from a 10.6-month supply in September." Although we did see a month over month improvement, these inventory numbers still confirm the unsettling trend of housing stock piling with nearly 4 million properties on the market today. The 8.4% year-over-year increase in inventory is especially bad news because the reported inventory is already historically very high and the 10.5 months of supply in October is far above normal. Unfortunately, as anyone...(read more)