Existing Home Sales Keep Up Momentum

Existing-home sales kept up momentum in November, climbing 1.9 percent to 5.32 million, the National Association of REALTORS® (NAR) reports. On an annual basis, however, sales were sluggish: 7 percent lower than in November 2017. 📷

In an improvement, inventory rose to 1.74 million year-over-year, according to NAR; last November, inventory totaled 1.67 million.

Across all house types (single-family, condo, co-op and townhome), the median price was $257,700, a 4.2 percent increase from the prior year. The median price in the single-family space was $260,500; the condo median was $236,400.

“The market conditions in November were mixed, with good signs of stabilizing home sales compared to recent months, though down significantly from one year ago,” says Lawrence Yun, chief economist at NAR. “Rising inventory is clearly taming home price appreciation.”

Activity was concentrated in three regions of the U.S.: the Midwest, the Northeast and the South. In the Midwest, activity expanded 5.5 percent to 1.34 million, with a median price of $199,100. In the Northeast, activity increased 7.2 percent to 740,000, with a median price of $291,400. In the South, activity rose 2.3 percent to 2.2 million, with a median price of $223,600. 

Existing-home sales fell in the West, sliding 6.3 percent to 1.04 million, with a median price of $380,600. “A marked shift is occurring in the West region, with much lower sales and very soft price growth,” Yun says. “It is also the West region where consumers have expressed the weakest sentiment about home-buying, largely due to lack of affordable housing inventory.” According to Yun, development is needed, and overdue, at practical prices.

“Inventory is plentiful on the upper-end, but a mismatch between supply and demand exists at affordable price points,” says Yun. “Therefore, facilitating real estate development of affordable housing units in designated Opportunity Zones can provide better housing access in addition to boosting the local economy.”

Currently, inventory is at a 3.9-month supply, NAR reports. Last month, existing-home sales averaged 42 days on market, two days more than the prior year. All told, 43 percent of homes sold were on the market for less than one month.

“It is not surprising to see homes remain on the market a little longer,” says John Smaby, 2019 NAR president. “Buyers can often negotiate a more favorable price in those circumstances, especially when paired with a motivated seller and the aid of a REALTOR® familiar with their local market.”

Month-over-month, sales in the single-family space ticked up to 4.71 million, but remained 6.7 percent under year-over-year, according to NAR. Condo and co-op sales totaled 610,000, a 1.7 percent increase month-over-month, but a 9 percent slump year-over-year. Twenty-one percent of sales were all-cash, with 13 percent by individual investors, NAR reports. Two percent were distressed. First-time homebuyers comprised 33 percent of sales.

The hottest markets in November, according to realtor.com®’s Market Hotness Index, were Midland, Texas; Fort Wayne, Ind.; Columbus, Ohio; Odessa, Texas; and Boston-Cambridge-Newton, Mass.

Source: NAR

Home Prices Still Increasing - Just a Little Slower

The views about the direction of home prices diverged slightly in September, as those reported in the S&P CoreLogic Case Shiller indices slowed for the second month in a row while those from the Federal Housing Finance Agency (FHFA) for both September and the third quarter mostly kept chugging along.

The Case-Shiller National Home Price index which covers all nine U.S. census divisions slowed from a 5.7 percent increase in August to 5.5 percent.  On a non-seasonally adjusted basis the index gained 0.1 percent and was up 0.4 percent after adjustment.  The monthly appreciation in August was reported at 0.2 percent unadjusted and 0.6 percent afterward.

The slowing was not as evident in the two city composite indices.  The 10-City posted an annual increase of 4.8 percent, down from 5.2% the prior month and the 20-City declined from 5.5 percent to 5.1 percent.  Neither composite posted a gain on a non-adjusted basis, the second month that those numbers were unchanged, but both were up 0.3 percent when adjusted, an acceleration from August's 0.1 percent gain.

Analysts polled by Econoday projected that the annual increase in the 20-City Composite would be 5.3 percent.  The forecast for the seasonally adjusted monthly gain was 0.3 percent. 

Las Vegas, San Francisco and Seattle reported the highest year-over-year gains among the 20 cities with Las Vegas again leading the way at 13.5 percent.  San Francisco's prices rose 9.9 percent and Seattle posted 8.4 percent annual appreciation.  Four of the 20 cities reported greater price increases in the year ending September 2018 versus the year ending August 2018.

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David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices provided the following commentary.

"Home prices plus data on house sales and construction confirm the slowdown in housing," he said. "The S&P CoreLogic Case-Shiller National Index showed a 5.5 percent year-over-year gain, weaker for the second month in a row as 16 of 20 cities showed smaller annual price gains. On a monthly basis, nine cities saw prices decline in September compared to August. In Seattle, where prices were rising at double digit annual rates a few months ago, prices dropped last month. The few places reporting larger gains including some of the cities which had the biggest gains and largest losses 10 years ago: Las Vegas, Phoenix and Tampa.

"Sales of both new and existing single-family homes peaked one year ago in November 2017. Sales of existing homes are down 9.3 percent from that peak. Housing starts are down 8.7 percent from November of last year. The National Association of Home Builders sentiment index dropped seven points to 60, its lowest level in two years. One factor contributing to the weaker housing market is the recent increase in mortgage rates. Currently the national average for a 30-year fixed rate loan is 4.9 percent, a full percentage point higher than a year ago."  As of September 2018, average home prices for the MSAs within the 10-City and 20-City Composites are back to their winter 2007 levels.  The National Index is now 11.5 percent above its previous peak in July 2006 and has increased by 54 percent from its 2012 trough.  Both of the composites have now exceeded their previous 2006 highs, the 20-City by 3.5 percent and the 10-City by 0.5 percent.  

The FHFA's Housing Price Index shows a 6.3 percent gain in home prices nationwide since the end of the third quarter in 2017. The appreciation was most pronounced in the West with both Idaho and Nevada posting appreciation slightly exceeding 15 percent.  Washington, Utah, and Colorado had increases of 10.6 to 9.2 percent. Home prices were up in 99 of the 100 largest metropolitan areas, most notably Boise, Idaho with a 20.1 percent increase.

FHFA said its month-over-month index was up 0.2 percent on a seasonally adjusted basis. That is down from the 0.4 percent increase posted for each of the previous five months.

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Of the nine census divisions, the Mountain division experienced the strongest four-quarter appreciation, posting an 8.9 percent gain between the third quarters of 2017 and 2018 and a 1.5 percent increase in the third quarter of 2018.  Annual house appreciation was similarly weak in the New England, Middle Atlantic, and West South-Central divisions, where prices rose less than 5.0 percent between the third quarters of 2017 and 2018.  Prices declined on a monthly basis in both the Pacific (-1.1 percent) and the West North Central (-0.1 percent) divisions.

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The FHFA HPI is based on the purchase prices of homes sold with financing from Freddie Mac and Fannie Mae.  The Index was benchmarked to 100 in January 1991. The September 2018 index reading was 266.9

The S&P CoreLogic Case-Shiller Home Price Indices are constructed to accurately track the price path of typical single-family home pairs for thousands of individual houses from the available universe of arms-length sales data. The National U.S. Home Price Index tracks the value of single-family housing within the United States. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50 percent appreciation rate since January 2000 for a typical home located within the subject market. 

The National Index set another new record in September, a reading of 205.82. August's peak was 205.81.  The 10- and 20-City Composites had readings of 227.31 and 213.76 respectively.  Los Angeles claims the highest index at 282.77 (a slight drop from August.)  Cleveland had the lowest reading at 124.26.

Source: Mortgage News Daily

September Home Sales Continue to Slow

September existing-home sales declined last month, after a previous month of stagnation in August, the National Association of REALTORS® reported Friday. All four major regions saw no gain in sales activity last month.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4 percent from August to a seasonally adjusted rate of 5.15 million in September. Sales are now down 4.1 percent from a year ago (5.37 million in September 2017).

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Lawrence Yun, NAR chief economist, says rising interest rates have led to a decline in sales across all regions of the country. “This is the lowest existing home sales level since November 2015,” he said. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

The median existing-home price for all housing types in September was $258,100, up 4.2 percent from September 2017 ($247,600). September’s price increase marks the 79th straight month of year-over-year gains.

Total housing inventory at the end of September decreased from 1.91 million in August to 1.88 million existing homes available for sale, and is up from 1.86 million a year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.3 last month and 4.2 months a year ago.

Properties typically stayed on the market for 32 days in September, up from 29 days in August but down from 34 days a year ago. Forty-seven percent of homes sold in September were on the market for less than a month.

“There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory,” said Yun. “Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.” Realtor.com®’s Market Hotness Index, measuring time-on-the-market data and listings views per property, revealed that the hottest metro areas in September were Midland, Texas; Fort Wayne, Ind.; Odessa, Texas; Boston-Cambridge-Newton, Mass.; and Columbus, Ohio.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased to 4.63 percent in September from 4.55 percent in August. The average commitment rate for all of 2017 was 3.99 percent.

“Rising interests rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” says Yun.

First-time buyers were responsible for 32 percent of sales in September, up from last month (31 percent) and a year ago (29 percent). NAR’s 2017 Profile of Home Buyers and Sellers – released in late 20174 – revealed that the annual share of first-time buyers was 34 percent. “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range,” said NAR President Elizabeth Mendenhall. “Entry-level homes remain highly sought after, as prospective buyers are advised to contact a Realtor® as early in the buying process as possible in order to ensure buyers can act fast on listings that catch their eye.”

NAR said all-cash sales accounted for 21 percent of transactions in September, up from July and a year ago (both 20 percent). Individual investors, who account for many cash sales, purchased 13 percent of homes in August, unchanged from July and down from 15 percent a year ago.

Distressed sales – foreclosures and short sales – were 3 percent of sales in September (the lowest since NAR began tracking in October 2008), unchanged from last month and down from 4 percent a year ago. Two percent of September sales were foreclosures and 1 percent were short sales.

Single-family and Condo/Co-op Sales Single-family home sales were at a seasonally adjusted annual rate of 4.58 million in September, down from 4.74 million in August, and are 4.0 percent below the 4.77 million sales pace from a year ago. The median existing single-family home price was $260,500 in September, up 4.6 percent from September 2017.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 570,000 units in September, down 3.4 percent from last month and 5.0 percent from a year ago. The median existing condo price was $239,200 in September, which is up 1.5 percent from a year ago.

Regional Breakdown - September existing-home sales in the Northeast decreased 2.9 percent to an annual rate of 680,000, 5.6 percent below a year ago. The median price in the Northeast was $286,200, which is up 4.1 percent from September 2017.

- In the Midwest, existing-home sales remained the same as last month at an annual rate of 1.28 million in September, but are still down 1.5 percent from a year ago. The median price in the Midwest was $200,200, up 1.9 percent from last year.

- Existing-home sales in the South decreased 5.4 percent to an annual rate of 2.11 million in September, down from 2.12 million a year ago. The median price in the South was $223,900, up 3.0 percent from a year ago.

- Existing-home sales in the West fell 3.6 percent to an annual rate of 1.08 million in September, 12.2 percent below a year ago. The median price in the West was $388,500, up 4.1 percent from September 2017.

Source: NAR