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NAR Reports

Sustained lull in signed contracts means pullback in home sales

(REAL ESTATE NEWS) Existing home sales aren’t looking super hot this month, but it’s not the bad news that you’re thinking – let’s discuss!

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Existing home sales slide in June

Low supply has kept home sales muted, with existing home sales dipping 1.8 percent in the month of June, albeit 0.7 percent above June of 2016, according to the National Association of Realtors. The Midwest region is the current bright spot as the only area sales actually rose during this period.

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Dr. Lawrence Yun, NAR Chief Economist, says the previous three-month lull in contract activity translated to a pullback in existing sales in June.

“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” said Yun.

He added, “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

There’s a silver lining

“The good news is,” observes Yun, “that sales are still running slightly above last year’s pace despite these persistent market challenges.”

The median price for an existing home rose 6.5 percent over the last year to $263,800, surpassing May as the new peak, and the 64th consecutive month of year-over-year gains.

Housing inventory declined 0.5 percent from the previous month, and 7.1 percent over the last year. Average days on market rose one day from May to 28 in June, which is down from 34 days in June 2016.

Supply and demand challenges

First time buyers were 32 percent of sales in June, down one percent from both in May and a year ago. Yun says “It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun.

“Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year,” noted Yun.

Spicy sales in the Midwest

In the Midwest, sales rose 3.1 percent from May but remain unchanged from this time last year. The median price rose 7.7 percent in the last year to $213,000.

In the Northeast, existing home sales actually fell 2.6 percent, but are 1.3 percent above a year ago (the median price was $296,300, up 4.1 percent for the year).

The South saw a 4.7 percent dip in sales ((unchanged from a year ago) and the median price in the South was $231,300, up 6.2 percent from a year ago.

Sales in the West declined 0.8 percent but are 2.5 percent above June 2016. The median price in the West was $378,100, up 7.4 percent from June 2016.

#HomeSales

Staff Writer at The Real Daily, Tara Steele has long covered real estate news, technology news and everything in between. She has analyzed economic data for ages, and relishes in telling the real story behind the real estate industry.

NAR Reports

Home prices up for third consecutive quarter, median price hits $232,100

(REAL ESTATE NEWS) Home prices continue to rise, and while homeowners may be feeling good about it, NAR notes some unhealthiness about these numbers, especially in areas where new home construction isn’t keeping up.

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Strong performance in housing

For the third consecutive quarter, home prices in America have risen on the tailwinds of the strongest quarterly sales pace in a decade which has put downward pressure on perpetually tight inventory levels, according to the latest quarterly report by the National Association of Realtors (NAR).

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Rising 6.9 percent from the first quarter of 2016, the national median existing single-family home hit $232,100, the fastest growth experienced since the second quarter of 2015. The median price during the fourth quarter of 2016 increased 5.9 percent from the fourth quarter of 2015. In the first quarter, home prices rose in 85 percent of measured markets.

NAR chief economist, Dr. Lawrence Yun says continual supply shortages ignited faster price appreciation across the country in the first quarter.

“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” said Dr. Yun.

“Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years,” Dr. Yun added.

He also noted that many metros have increased demands as employment levels rebound, but new home construction isn’t up, particularly in the South and West, leading to “unhealthy price appreciation that far exceeds incomes.”

Regional performances varied

NAR reports that total existing-home sales in the Northeast declined 2.2 percent in the first quarter but are 4.2 percent above the first quarter of 2016. The median existing single-family home price in the Northeast was $255,000 in the first quarter, up 2.2 percent from a year ago.

In the Midwest, existing-home sales dipped 4.3 percent in the first quarter but are 1.6 percent above a year ago. The median existing single-family home price in the Midwest increased 5.7 percent to $176,600 in the first quarter from the same quarter a year ago.

Existing-home sales in the South jumped 5.8 percent in the first quarter and are 5.8 percent higher than the first quarter of 2016. The median existing single-family home price in the South was $209,000 in the first quarter, 8.8 percent above a year earlier.

In the West, existing-home sales rose 1.6 percent in the first quarter and are 7.4 percent above a year ago. The median existing single-family home price in the West increased 8.4 percent to $342,500 in the first quarter from the first quarter of 2016.

#HomeSales

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NAR Reports

Home sales are off to a great start this year

(NAR REPORTS) Home sales are off to a really great start. Like pre-recession levels, readers – what challenges could hold the market back?

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Home sales off to a good start

Existing home sales rose in January to the fastest pace in nearly a decade, according to the National Association of Realtors, with all regions gaining except for the Midwest.

Completed transactions rose 3.3 in January to a seasonally adjusted annual rate of 5.69 million in January from an upwardly revised 5.51 million in December 2016. The pace is up 3.8 percent from a year ago, the strongest seen since February 2007. Those are pre-crash numbers, you guys!

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Dr. Lawrence Yun, NAR Chief Economist, says the gains signal consumer resilience despite rising interest rates.

“Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” he said.

“Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions,” noted Dr. Yun.

Home prices continue to rise

The median existing home price in January rose 7.1 percent over the year to $228,900. This period’s increase marks the most rapid since last January, and represents the 59th consecutive month of year-over-year gains.

Inventory is 7.1 percent lower than a year ago, but actually rose in January by 2.4 percent – welcome news for the homebuyers that have been benched by tight inventory levels (that combined with rising prices, creates affordability problems).

Nationally, properties averaged 50 days on the market, down 14 days a year ago. Click To Tweet

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range,” added Dr. Yun. NAR’s research indicates that combining tight inventory levels with rising interest rates led to households in over half of all states last months being able to afford less.

Another challenge for buyers in coming months

NAR President William E. Brown, cautions about another source that could possibly drag down inventory for would-be buyers in coming months.

“Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm’s investment in single-family rentals,” he said.

“This will only further hamper tight supply and put major investors in direct competition with traditional buyers. Instead, the GSEs should lower overly burdensome fees and help qualified borrowers become homeowners.”

home sales

All regions but the Midwest saw more sales

Home sales in the Northeast jumped 5.3 percent to an annual rate of 800,000, and are now 6.7 percent above a year ago. The median price in the Northeast was $253,800, which is 2.5 percent above January 2016.

In the Midwest, existing-home sales decreased 1.5 percent to an annual rate of 1.29 million in January, and are 0.8 percent below a year ago. The median price in the Midwest was $174,900, up 6.5 percent from a year ago.

Existing-home sales in the South in January rose 3.6 percent to an annual rate of 2.31 million, and are now 3.1 percent above January 2016. The median price in the South was $201,400, up 9.2 percent from a year ago.

Existing-home sales in the West ascended 6.6 percent to an annual rate of 1.29 million in January, and are now 8.4 percent above a year ago. The median price in the West was $332,300, up 6.8 percent from January 2016.

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NAR Reports

Home sales surge in Q4, pushing prices up, threatening affordability

(REAL ESTATE NEWS) With home sales improving, we’re tempted to celebrate, but NAR says there’s a lingering caveat that could threaten future sales.

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home sales affordability fha report

Good news, bad news

Home sales in the fourth quarter hit the highest pace of the year, pushing inventory levels to record lows while pushing up housing prices, according to the National Association of Realtors (NAR).

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The study indicates that in more than half of the markets measured since 2005, sales prices are now at or above their previous peak level. For all of 2016, 87 percent of measured markets saw home prices rise, up from 2015 (86 percent) and 2014 (75 percent).

This is phenomenal news for homeowners sitting on appreciated properties, but bad news for potential homebuyers being squeezed out of the market by suffocating affordability conditions and limited availability.Click To Tweet

Supply and demand

Lawrence Yun, NAR chief economist, says home-price gains showed little evidence of letting up through all of 2016. “Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” he said.

“At the same time,” he noted, “the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

Added Yun, “Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

Prices on the rise

The national median existing home price in Q4 rose 5.7 percent over the year to $235,000.

The year ended with 1.65 million existing homes available for sale, a remarkable 6.3 percent below the close of 2015, and the lowest level since NAR began tracking the supply of all housing types in 1999.

The average supply during the fourth quarter was 3.9 months – down from 4.6 months a year ago.

Regional breakdown

In the Northeast, sales rose 10.5 percent from the previous quarter and 6.4 percent over the year. The median home price fell 0.2 percent in the last year to $254,100.

Sales in the Midwest increased 2.3 percent in the fourth quarter, rising 8.8 percent above a year ago. The median home price rose 5.7 percent over Q4 2015 to $181,100.

In the South, sales increased 2.6 percent for the quarter, marking a 5.4 percent increase over the year. The median home price surged 7.9 percent in the last year to $210,500.

Sales in the West rose 1.6 percent from the previous quarter, and are 9.1 percent above a year ago. The median home price rose 7.8 percent in a year to $348,800.

Affordability problems linger

In recent years, NAR has endlessly warned of the tightening affordability conditions that stand to squeeze some interested homebuyers out of the market.

Despite what they call a “meaningful increase in the national family median income ($70,831),” rising mortgage rates and home prices weakened affordability conditions compared to 2015.

The report notes: “To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,017, a 10 percent down payment would require an income of $48,332, and $42,962 would be needed for a 20 percent down payment.”

Yun concluded, “Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices. Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit.”

Here’s to hoping homebuilders will be able to loosen this chokehold.

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