Existing home sales rate increases 10.0 percent in September

Dennis Norman

Dennis Norman

Today’s existing home sales report from theNational Association of REALTORS(R) shows existing home sales in September were at at a seasonally adjusted-annual rate of 4.53 million units which is an increase of 10.0 percent from August but is a a decline of 19.1 percent from a year ago. Continue reading “Existing home sales rate increases 10.0 percent in September

Pending Home Sales Increase in August; Still down 20 percent from year ago

Dennis Norman

Pending home sales rise for 2nd consecutive month in August –

The National Association of REALTORS Pending Home Sales Index for August shows an increase of 4.3 percent in the index from the month before (seasonally adjusted), which is 20.1 percent below a year ago. Continue reading “Pending Home Sales Increase in August; Still down 20 percent from year ago

Existing home sales in August improve slightly reaching second-lowest rate in over fourteen years

Dennis Norman

Dennis Norman

After July’s existing home sales fell over 27 percent and hit ROCK BOTTOM, August didn’t fare much better…..

Today’s existing home sales report from theNational Association of REALTORS(R) shows existing home sales in August were at at a seasonally adjusted-annual rate of 4.13 million units which is an increase of 7.6 percent from July’s dismal rate but is a a decline of 19.9 percent from a year ago and the second-lowest sales rate in over 14 years (July was the lowest). Continue reading “Existing home sales in August improve slightly reaching second-lowest rate in over fourteen years

Pending home sales rise in July; Down 19 percent from the year before

Dennis Norman

After hitting all-time low in June, pending home sales increase 5.2 percent in July

The National Association of REALTORS Pending Home Sales Index for July shows an increase of 5.2 percent in the index in July (seasonally adjusted) which is 19.1 percent below July 2009. Continue reading “Pending home sales rise in July; Down 19 percent from the year before

Home Sales Plummet in July to Record Low

Dennis Norman

Dennis Norman

Beginning last November I have written several articles about the “sugar-rush” effect of tax credits and other stimulus on the housing market and voicing my concern that these things are short lived (like a sugar rush on a child) and after the sugar wears off there is a crash….Well, as expected, here it is…

Today’s existing home sales report from theNational Association of REALTORS(R) shows existing home sales in St. Louis for July decreased 36.1 percent from a year ago.  For the  US as a whole, existing home sales in July were at at a seasonally adjusted-annual rate of 3.83 million units which is a decline of 27.2 percent from June and is a decline of 25.5 percent from a year ago. Continue reading “Home Sales Plummet in July to Record Low

Pending Home Sales Hit a new Record-Low in June

Dennis Norman

NAR Pending Home Sales Index at Lowest Level Since Index Began in 2001

At dropping 30 percent in May as a result of the rush to buy a home before the April 30th tax credit deadline, the National Association of REALTORS Pending Home Sales Index for June shows a further decline of 2.6 percent in the index in June (seasonally adjusted) which is 18.6 percent below June 2009. While the decrease in home sales was expected, I’m a little surprised we are running so far behind last year (which, might I remind you, wasn’t that great of year for home sales?). Continue reading “Pending Home Sales Hit a new Record-Low in June

Housing Market Outlook and Forecast

Dennis Norman

This week I attended an event at the St. Louis Association of REALTORS® in which Lawrence Yun, Chief Economist for the National Association of REALTORS® was the featured speaker and gave his take on the housing market as well as his housing market outlook. Continue reading “Housing Market Outlook and Forecast

Closing of Tax Credit Induced Home Purchases Prop-Up Market in June; St Louis Tops In Price Gain Among Metros

Dennis Norman

Dennis Norman

Last month I said that I expected to see some elevated numbers in the existing home sales report for May and June since this report would reflect the actual closing of the home purchases from buyers that raced to buy before the April 30th home-buyer tax credit deadline. Even though Congress has extended the deadline to close on these purchases until August 31st, the majority of the tax-credit induced sales will have closed by June 30th and therefore be reflected in today’s report which I would say has happened.

Today’s existing home sales report from theNational Association of REALTORS(R) shows existing home sales in June were at at a seasonally adjusted-annual rate of 5.37 million units which is a decline of 5.1 percent from May but is 9.8 percent higher than a year ago..

Prices on the rise for fourth consecutive month –

The median home price in the U.S. in June was $183,700 an increase of 5.2 percent from May and an increase of 1.0 percent from a year ago when the median price was $181,800.

Inventory levels increase-

Inventories decreased in May after being on the rise three consecutive months but were back on the rise again in June as the number of existing homes for sale in June finally increased to 3,992,000, an increase of 2.5 percent from May and an increase of 4.7 percent from a year ago. The number of months “supply” this inventory represented in June, based upon current sales levels, increased to 8.9 months making it the highest level since August 2009.

Metro Home Sales and Prices –

NAR publishes existing home sales for 20 major metropolitan areas of the U.S. Highlights from that report include:

  • Pittsburgh, PA pushed Portland out of the first spot where it reigned for three months with the largest year-over-year increase in existing home sales in June with Pittsburgh seeing an increase of 23.9 percent in sales from a year ago.
    • Boston, Massachusetts spent it’s second month at number two for June with a 23.7 percent increase in existing home sales from a year ago.
    • New York, NY was number three with a 21.0 percent increase in existing home sales from a year ago.
  • St. Louis led the way in price increases from a year ago, with June’s median home price of $161,500 representing a 9.9 percent increase from a year ago when the median price was $146,900.
    • San Diego, CA came in second for the second consecutive month with a median price of $397,600, a 8.4 percent increase from a year ago when it was $366,900.
    • Boston, MA came in third with a median price of $391,600, a 8.2 percent increases from a year ago when it was $361,800.

Lawrence Yun, NAR chief economist,said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.” (hey, I’ve been saying this for months :)

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:

  • There were 564,000 existing homes sold in June which is a 7.2 percent increase from May and a 8.3 percent increase from a year ago.
  • Below are highlights from each region:
    • Northeast – 103,000 homes sold in June, a whopping increase of 30.4 percent from May and an increase of 14.4 percent from the year before.
    • Midwest – 131,000 homes sold in June, an increase of 0.8 percent from May and an increase of 9.2 percent from the year before.
    • South – 206,000 homes sold in June, an increase of 5.6 percent from May and an increase of 9.0 percent from the year before.
    • West – 124,000 homes sold in June, an increase of 1.6 percent from May and a increase of 1.6 percent from the year before.

Other highlights of the NAR Report:

  • Distressed sales accounted for 32 percent of all home sales in June, up from 31 percent in May.
  • First-Time homebuyers accounted for 43 percent of the home sales in June, down from 46 percent in May.
  • Investors were the buyers of 13 percent of the homes in June, down from 14 percent in May.
  • Repeat home buyers were responsible for approximately 44 percent of June’s sales up from 40 percent in May.

My Take On the Numbers:

We have clearly seen a boost to the housing market as a result of the home-buyer tax credit and continue to get a little support as the deals close. Unfortunately the economy still has major issues….Fannie Mae’s housing forecast in June took a sharp turn downward (which I will be writing about in the next day), unemployment increased today and there is still much political unrest in the country. I think the best we can hope for at this point is for some stabilization in the housing market which we are seeing some glimpses of. It will be quite a while before I will be using the “R” word though (recovery).

Foreign Purchases of US Residential Real Estate Nearly Doubles

Dennis Norman

I may be getting desperate to find something good to write about with regard to the Housing Market, but nonetheless I found some good news today! According to a report titled “Foreign Investment in U.S. Real Estate” that was released recently by the National Association of REALTORS®, investment in residential real estate in the U.S. by foreigners shot up by almost 80% for the 12-month period ending April 2010 from the 12 month period ending April 2009.

For the 12 month period ending April 2010 foreign purchases of residential real estate in the U.S. totaled $64 billion which is almost double the $36 billion in foreign purchases for the 12-month period ending April 2009.

Not surprisingly, the bulk of this activity took place in States that are popular vacation destinations, which also include some of the states where home prices have been beat down the hardest and foreclosure activity the greatest. Florida led the way with 22 percent of the foreign purchases being in the sunshine state, followed by California at 12 percent, Arizona at 11 percent and Texas at 8 percent.

So there you have it, some good news!

Pending Home Sales Index For May Drops to Lowest Level In History of Index

Dennis Norman

There was no question in my mind that home sales would plummet after the April 30th deadline to buy a home and qualify for the home-buyer tax credit passed, the only question was how bad? Today the National Association of REALTORS released it’s Pending Home Sales Index for May showing a decrease of 30.0 percent in the index from April (seasonally adjusted) and a 15.9 percent increase from May 2009. In my past articles I have spoke of a “sugar-rush” created in the market by the tax credits and the sudden slow-down after that wears off…we are now seeing this. Unfortunately the tax-credits could not ‘fix” the market, it was just a band-aid to spur some activity. The market won’t get fixed until the economy is in better shape; people have jobs and the foreclosure rate drops dramatically.

Here are highlights from the report:

  • May’s pending home sales index (seasonally adjusted) was 77.6 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which is the lowest level the index has hit since NAR began the index in 2001.
  • May’s not-seasonally adjusted index index was 89.0 a 30.3 percent decrease from April and a 15.6 percent decrease from a year ago.
  • All regions in the U.S. saw month-over-month and year-over-year declines in pending home sales.

Lawrence Yun, NAR chief economist, said “Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June,” he said. “Surprisingly, though, some local markets such as Portland, Maine, and Jacksonville, Fla., actually experienced an increase in contract signings from a year ago without the tax credit.”

Home Sales Fall Slightly in May; Still Propped-Up By Tax Credit Deals

Dennis Norman

Dennis Norman

May and June Sales Expected to Remain Elevated as Buyers Rush to Close By June 30th Deadline for Tax Credits.

The deadline to buy a home and qualify for the home-buyer tax credit was April 30th so it’s not surprising we saw pending home-sales increase dramatically in March and April as buyers rushed to get “under-contract” before the April 30th deadline. For those home-buyers that were lucky enough to qualify for the home-buyer tax credit they have, unless Congress extends the deadline, until June 30, 2010 to close on the purchase of their home. Therefore, as I have said before, I fully expect to see “existing home sales” (a report that counts actual “closed” sales) elevated for May and June as these deals close.

Today’s existing home sales report from theNational Association of REALTORS(R), as expected, shows strong sales for the month of May. Existing home sales in May were at at a seasonally adjusted-annual rate of 5.66 million units which is actually a decline of 2.2 percent from April but is still 19.2 percent higher than a year ago.

Prices on the rise for third consecutive month –

The median home price in the U.S. in May was $179,600 an increase of 4.2 percent from April and an increase of 2.7 percent from a year ago when the median price was $174,800.

Inventory levels rescind-

After increasing for four consecutive months, the number of existing homes for sale in May finally decreased to 3,892,000, a decrease of 3.4 percent from April and an increase of 1.1 percent from a year ago. The number of months “supply” this inventory represented in May, based upon current sales levels, decreased slightly to 8.3 months from 8.4 months in April and a 14.4 percent decrease from a year ago when there was a 9.7 month supply.

Metro Home Sales and Prices –

NAR publishes existing home sales for 20 major metropolitan areas of the U.S. Highlights from that report include:

  • Portland, Oregon for the third consecutive month, saw the largest year-over-year increase in existing home sales in May with an increase of 40.6 percent in sales from a year ago.
    • Boston, Massachusetts went from number three last month to number two for May with a 36.2 percent increase in existing home sales from a year ago.
    • Philadelphia, Pennsylvania was number three with a 35.7 percent increase in existing home sales from a year ago.
  • Philadelphia, Pennsylvania led the way in price increases from a year ago, with May’s median home price of $265,700 representing a 28.5 percent increase from a year ago when the median price was $206,800.
    • San Diego, CA came in second with a median price of $391,400, a 18.2 percent increase from a year ago when it was $331,200.
    • Phoenix, Arizona came in third with a median price of $144,800, a 10.8 percent increases from a year ago when it was $130,700.
  • St. Louis saw an increase of 25.5 percent in existing home sales in May from a year ago and an increase of 6.5 percent in median home prices for the same period.

Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. “We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.”

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers (nor does Standard & Poors now either as I wrote about), particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:

  • There were 526,000 existing homes sold in May which is a 0.8 percent increase from April and a 17.7 percent increase from a year ago.
  • Below are highlights from each region:
    • Northeast – 79,000 homes sold in May, a decrease of 16.0 percent from April and an increase of 11.3 percent from the year before.
    • Midwest – 130,000 homes sold in May, an increase of 8.3 percent from April and an increase of 21.5 percent from the year before
    • South – 195,000 homes sold in May, an increase of 2.1 percent from April and an increase of 21.9 percent from the year before.
    • West – 122,000 homes sold in May, an increase of 4.3 percent from April and a increase of 11.9 percent from the year before.

Other highlights of the NAR Report:

  • Distressed sales accounted for 31 percent of all home sales in May, down from 33 percent in April.
  • First-Time homebuyers accounted for 46 percent of the home sales in May, down from 49 percent in April.
  • Investors were the buyers of 14 percent of the homes in May, down from 15 percent in April.
  • Repeat home buyers were responsible for approximately 40 percent of May’s sales up from April’s 36 percent..

My Take On the Numbers:

Last month I said I expected “Pending Home Sales” to drop significantly from April and I still do, and I expected to see an increased level of “Existing Home Sales”, “although not at as high of level as April” and that is exactly what we see here. That was the “low-hanging fruit” though, the easy one to call. The harder thing to predict is just how much will the pending home sales numbers for May be and how much will existing home sales drop after the tax-credit deals are all done in June? Unfortunately my guess for both is “rather significantly”.

 

Pending Home Sales Increase In April as Buyers Rush to Beat Tax Credit Deadline

Dennis Norman

Today the National Association of REALTORS released it’s Pending Home Sales Index for April showing an increase of 6.0 percent in the index from March (seasonally adjusted) and a whopping 22.4 percent increase from April 2009. This comes on the heels of a 5.3 percent increase in March and an 8.3 percent increase in February. If these were pure “market-driven” sales this would be extremely exciting news and point toward a recovery in the real estate market. Unfortunately, everything I see points to this being driven primarily, if not purely, by the April 30th deadline to enter into a contract to purchase a home to receive the home-buyer tax credit.

Here are highlights from the report:

  • April”s pending home sales index (seasonally adjusted) was 110.9 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which was a 6.0 percent increase in the index from March and an increase of 22.4 percent from the year before.
  • April’s not-seasonally adjusted index index was 133.5 a 11.0 percent increase from March and a 24.6 percent increase from a year ago.
  • The only region that saw a month-over-month decline in pending home sales (seasonally adjusted) was the South region, after having the largest month-over-month increase last month, it saw a decrease of 0.6 percent from March, but was still up 31.3 percent from a year ago.
  • The Northeast had the largest month-over-month increase in pending home sales (seasonally adjusted) with a 29.5 percent increase from March.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

Existing Home Sales Increase In April As Tax Credits End

Dennis Norman

Dennis Norman

Sales increased for second consecutive month-

With the home-buyer tax credits ending April 30th, it’s not surprising that we saw an increase of home sales in March, and now in April, as buyers rushed to buy before the deadline to have a congract of April 30, 2010. According to the latest report from the National Association of REALTORS(R), existing home sales in the US in April increased 7.6 percent to a seasonally adjusted-annual rate of 5.77 million units in April from a revised level of 5.36 million units in March, and increased 22.8 percent from a year ago when the rate was 4.70 million units (seasonally adjusted).

Prices on the rise for second consecutive month –

The median home price in the U.S. in April was $173,100 an increase of 2.1 percent from March’s $169,600 and an increase of 4.0 percent from a year ago when the median price was $166,500.

Inventories on the rise-

For the fourth consecutive month, the number of existing homes for sale in April increased bringing the total to 4,044,000, an increase of 11.5 percent from March and an increase of 2.7 percent from a year ago. The number of months “supply” this inventory represented in April, based upon current sales levels, increased to 8.4 months, up from 8.1 months in March but a 16.8 percent decrease from a year ago when there was a 10.1 month supply.

Local Hot Spots –

NAR publishes existing home sales for 20 major metropolitan areas of the U.S. Highlights from that report include:

  • Portland, Oregon for the second consecutive month, saw the largest annual increase in existing home sales in April with an increase of 49.2 percent in sales from a year ago.
    • Pittsburgh, Pennsylvania was number two with a 42.2 percent increase in existing home sales from a year ago.
    • Boston, Massachusetts was number three with a 41.8 percent increase in existing home sales from a year ago.
  • Indianapolis, Indiana led the way in price increases from a year ago, with April’s median home price of $124,600 representing a 17.1 percent increase from a year ago when the median price was $106,400.
    • Phoenix, Arizona came in second with a median price of $144,700, a 16.2 percent increase from a year ago when it was $124,500.
    • San Diego and Miami/Ft Lauderdale fell in behind Phoenix with annual median price increases of 15.4 percent, and 14.8 percent respectively.

Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers (nor does Standard & Poors now either as I wrote about), particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:

  • There were 521,000 existing homes sold in April which is a 21.4 percent increase from March and a 26.2 percent increase from a year ago.
  • Below are highlights from each region:
    • Northeast – 94,000 homes sold in April, an increase of 40.3 percent from March and an increase of 42.4 percent from the year before.
    • Midwest – 120,000 homes sold in April, an increase of 21.2 percent from March and an increase of 33.3 percent from the year before
    • South – 191,000 homes sold in April, an increase of 19.4 percent from March and an increase of 26.5 percent from the year before.
    • West – 116,000 homes sold in April, an increase of 12.6 percent from March and a increase of 9.4 percent from the year before.

Other highlights of the NAR Report:

  • Distressed sales accounted for 33 percent of all home sales in April, down from 35 percent in March.
  • First-Time homebuyers accounted for 49 percent of the home sales in April, up from 44 percent in March.
  • Investors were the buyers of 15 percent of the homes in April, down from 19 percent in March.
  • Repeat home buyers were responsible for approximately 36 percent of April’s sales down from March’s 37 pecent..

My Take On the Numbers:

For the past two months I have said that I am encouraged by the sales numbers as I am again this month. However I continue to echo my caution that I’m confident this boost is artificial and has been brought on by the homebuyer tax credit program coming to an end. The spring season has brought more homes on the market thereby increasing inventory, but the months supply doesn’t look bad at 8.4 months….but remember, that is based on a “seasonally adjusted” sales rate of 5.77 million homes; a rate that cannot and will not be sustainable in my opinion.

I think in May we will see “Pending Home Sales” drop significantly from April but we will still see an increased level of “Existing Home Sales” (although not at as high of level as April) as NAR counts “closed home sales” in this data, and since people that went under contract to buy before the April 30th deadline have until July 31st to close the sale, we won’t see the full effect of no tax credits on existing home sales until August.

First Quarter Home Sales Up From a Year Ago in many Metro Areas Including St. Louis

Dennis Norman

According to a report issued by the National Association of REALTORS, a growing number of metropolitan areas are experiencing price gains from a year ago, while most states have seen healthy gains in home sales from the first quarter of 2009.

Here in St. Louis, the median home price for first quarter was $116,100, a 15.1 percent increase from a year ago when the median price was $100,900, however an 8.4 percent decrease from the 4th quarter of 2009 when the median home price for the St. Louis area was $126,800.  State-wide, the median home price in Missouri for first quarter was $100,800, an increase of 4.6 percent from a year ago when the median price for Missouri was $96,400, but a 17.9 percent decline from the 4th quarter of 2009 when the median home price was $122,800.

Highlights from the Metro report for the first quarter of 2010:

  • 91 out of 152 metropolitan areas showed higher median existing single-family home prices in comparison with the first quarter of 2009, including 29 with double-digit increases; three were unchanged and 58 metros had price declines.
    • In the fourth quarter of 2009,  67 areas reported gains and 123 were down, while only 30 metro areas in third quarter of 2009 showed annual price increases.
  • The national median existing single-family price was fairly flat at $166,100, down 0.7 percent from the first quarter 2009 price of $167,300. The median is where half sold for more and half sold for less. Distressed homes, which typically are discounted by 15 percent relative to traditional homes, accounted for 36 percent of first quarter sales.

To see the complete report for all metro areas click here.

Highlights from the State report for the first quarter of 2010:

  • Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.14 million in the first quarter, down 14.0 percent from 5.97 million in the fourth quarter, 2009.  However, first quarter sales remain 11.4 percent above the 4.61 million-unit level in the first quarter of 2009.
  • Sales increased from a year ago in 44 states and the District of Columbia; 31 states and D.C. saw double-digit gains while two were unchanged and four were down.

To see the complete report for all states click here.

Lawrence Yun, NAR chief economist, said stabilizing home prices are encouraging. “This flattening in home prices is something we’ve been seeing in all of the home price measures lately, and quite clearly in this metro area price report,” he said. “The tax credit has been very effective in drawing down excess inventory, with about one million additional sales resulting directly from the stimulus.”

Pending Home Sales Continue On The Rise In March

Dennis Norman

Today the National Association of REALTORS released it’s Pending Home Sales Index for March showing an increase of 5.3 percent in the index from February  (seasonally adjusted) and a whopping 21.1 percent increase from March 2009.  This follows an 8.3 percent increase in February so it is definitely creating a nice trend that makes me somewhat optimistic.  We should remember though, in March and April we are expecting to see home sales spike as buyers rush to buy before the April 30th deadline to have a home under contract to qualify for the homebuyer tax credit.

Here are highlights from the report:

  • March”s pending home sales index (seasonally adjusted) was 102.9 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which was a 5.3 percent increase in the index from February and an increase of 21.1 percent from the year before.
  • March’s not-seasonally adjusted index index was at 118.4, a 32.9 percent increase from February and a 23.5 percent increase from a year ago.
  • The only region that saw a month-over-month decline in pending home sales (seasonally adjusted) was the Northeast region with a decrease of 3.3 percent from February.
  • The South had the largest month-over-month increase in pending home sales (seasonally adjusted) with a 12.7 percent increase from February, and also had the largest year-over-year increase as well with a 28.3 percent increase from March 2009.

Lawrence Yun, NAR chief economist, said favorable affordability conditions have been working with the tax credit. “Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

Existing Home Sales Jump in March – St. Louis Shows Strong

Dennis Norman

Dennis Norman

According to the latest report from the National Association of REALTORS(R), existing home sales in the US in March increased 6.8 percent to a seasonally adjusted-annual rate of 5.35 million units in March from a revised level of 5.01 million units in February, and increased 16.1 percent from a year ago when the rate was 4.61 million units (seasonally adjusted).

St. Louis Shows Strong Against Other Metros –

NAR publishes existing home sales for 20 major metropolitan areas of the U.S. which showed the St. Louis Real Estate Market in a pretty positive light.  St. Louis ranked 2nd of the metro’s in terms of one-year median home price increase with an increase in March of 19.8 percent from a year ago.  In terms of the increase in existing home sales in March from a year ago St. Louis came in fifth with a 25.6 percent increase

Highlights from the report-

  • The median home price in the U.S. in March was $170,700 an increase of 3.7 percent from February’s $164,600 and an increase of 0.4 percent from a year ago when the median price was $170,000.
  • The inventory of existing homes for sale in March actually increased 1.5 percent from the month before but, due to the increased rate of home sales, the “months supply” of homes decreased from 8.5 months to 8.0 months in March representing a decline of 5.9 percent for the month and a decline of 15.8 percent from a year ago when there was 9.5 months supply of existing homes for sale.
  • Distressed sales accounted for 35 percent of all home sales in March, the same as February.
  • First-Time homebuyers accounted for 44 percent of the home sales in March, up from 42 percent in February.
  • Investors were the buyers of 19 percent of the homes in March, the same as February.
  • Repeat home buyers were responsible for approximately 37 percent of March’s sales down from February’s 39 pecent..

Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”

My Take On the Numbers:

Last month I said that I was somewhat encouraged by the existing home sales for February and that I thought “the housing market, at least in many areas of the country, is toying with the bottom”. After seeing strong numbers in March I am again encouraged. I do think however we should all have “cautious optimism” as almost half of March’s home sales were first time home buyers who could be racing to beat the April 30th deadline to buy. My guess is we will see pretty good sales numbers in April as well, then the next couple of months beyond that will tell us if the market truly has any staying power or if it was just the “sugar-rush” of the tax-credits that boosted the market.

You can see the complete report and a more in-depth analysis here.

 

Homes are affordable; Should you buy? Rent? Do home prices need to fall further?

Dennis Norman

I thought I would end the week by giving everyone something to dwell on and contemplate over the weekend. Actually, I set out this morning to do a post about the National Association of REALTORS(R) (NAR) Housing Affordability Index for February which was recently published. As I was reviewing the data in the report I started giving “affordability” a lot of thought, went down a few rabbit trails, did a few hours of research and ended up with an analysis of home affordability.

The NAR Report:

Since this was the initial topic I thought I should say a little about it. The NAR Housing Affordability Index for February was at 176.0 meaning that a median-income family has 176 percent of the income they need to purchase a median-priced house, which is good. This is down slightly from January’s index of 177.5 but is still a vast improvement from a couple of years ago when it was 115.4 in 2007 (the higher the number the better).

This is where I started digging in a little though. There are several factors that play a role in the index: median home prices, mortgage rate and median family income. Since 2007 median family income has dropped about 1 percent which has very little affect on affordability however interest rates have dropped from 6.52% in 2007 to 5.13% in February, a decline of over 21% and home prices have fallen almost 25% during the same period so it’s not surprising that homes are more affordable, particularly since the index uses the house payment to determine affordability.

Low interest rates – how much of a factor?

The NAR index is based upon a monthly payment of $1,104 on a median priced home in 2007 and a payment of $716 on a median-priced home in February 2010; a decrease of $388 in payment over the period. So how much of a role did interest rates play in the decrease? Well, lets put it this way; if in 2007 the rates were 5.13% as they were in February the payment on a median priced home would have been $950, $154 less than it was. And, if interest rates now were 6.52 like they were in 2007 then the payment on a median priced home would be $833. So if we take do an apples to apples comparison with regard to interest rates, then the lower home prices have resulted in a monthly savings of $117 instead of $388. Hmm…

interest-rates-89-09In the chart to the right you can see mortgage interest rates for the past 20 years and can see just how low rates are today, about half of what they were 20 years ago. The median interest rate for the 20-year period of 1989 – 2009 is 7.31% which should remind us that rates will most likely not stay as low as they are now.

So what happens if interest rates go up, say back to the 20-year median rate of 7.31%? Well, going back to NAR’s affordability index, if we apply that rate to the current median home price used in the index the payment goes from $716 to $902, an increase of $186, or 26% which I would say is significant and would chop NAR’s affordability index down a chunk.

Here’s the scary part: home affordability is not far off an all time high and we have incentives such as home buyer tax credits, and yet home sales are dragging along at depressed levels which tells me we can’t afford to have housing affordability go the other direction.

If interest rates increase how much would home prices have to fall to keep affordability the same?

OK, let’s say, that in spite of what the government is telling us, interest rates go up, maybe even up to the 20-year median rate of 7.31%, what would have to happen to prices to keep affordability the same? Well, assuming the median family income stays the same, the median home price would have to drop from the February price of $164,300 to $130,418, a drop of almost 21%, in order to maintain housing affordability where it is now. Make a mental note of that price drop and read on please.

home-price-interest-rate-chart

Relationship between rent and home prices

As home prices shot up during the boom one thing that hit me was that rental and lease rates on homes were not increasing at nearly the same rate and prices on rental property seemed to be way out of whack with the income. Last year I wrote a post and told a story of my wife and I searching for a condo in Florida in 2003 to buy for a vacation rental and finding that the relationship between the prices and the income was nuts….it made no sense at all what people were paying. Since then I have seen several articles by people much smarter than me that have discussed the relationship between the “rental value” of a home and it’s sales price and when this gets too out of whack something breaks….home prices.

During the boom this was clearly evident…One example I remember is there was a developer in Clayton, an ecclectic, upscale neighborhood in St. Louis, MO, that built a wonderful new home in a transitional neighborhood and offered it for sale at $1.6 million. The house was well worth the money but, since this was a “tear-down” in an older neighborhood of much more modest homes, the price was significantly higher than the neighboring homes. Long story short, the builder couldn’t sell it, so he offered it for lease, first for around $5,000 a month, then later $3,500 and leased it. I remember doing the numbers then and thinking what a bargain leasing the home would be versus owning it. If you bought the home at the time, put 20% down ($320,000) you would have a payment of $7,567 plus taxes and insurance, so probably around $9,000 a month by the time you were done. Or, you could put down a security deposit of $3,500 and lease it for $3,500 a month. The lease route saved you $316,500 in cash up front and about $5,500 a month versus buying the home which made me realize either rents were way too low or prices too high…reality is it was probably a little of both.

median-rent-sale-priceI decided to take a look at the relationship between median rental rates and median home prices over the past 20 years to see if this data might help me understand where things stand.

Playing economist I developed a price/rent ratio based upon median home prices’ relationship to median annual rental rates. As you can see in the chart to the right, this ratio was in the 13 to 14 range from 1989 through 1995 then inched up to the 15 to 16 range until 2005 when it shot up into the mid-20’s and then settled at 18.47 in 2009.

Home prices are still too high

The chart below shows my price/rent ratio over a 20 year period and shows the median for the period in red. From about 1996 until late 2003 the ratio was right at the median and I think there was a balance between rent and home prices. However, in 2004 home prices shot up and, even though, as the chart shows, started a decent in 2007, are still above the median range indicating to me that home prices are still too high. For 2009 the median home sales price (based upon census data) was $156,900 but in order to bring the price/rent ratio back in line with the “normal” period of ’96 through ’03, the median home price would need to be around $134,842, a decline of another 14 percent or so.

home-annual-annual-rent-ratio

house with american flagThe American Dream

Home ownership has, for as long as I can remember, been referred to as “the American dream” while at the same time renting or leasing a home has, by many people, been looked upon as a last resort or something not for them. Well, guess what? Times are changing! I should stop now and interject the fact that I am a REALTOR(R) and very much want people to buy homes, but the honest truth is that may not be the best alternative for everyone at this time. Our country is at a very volatile point in many regards and we have experienced the worst economy since the great depression….these are not normal times.

While, short of God, no one can, with certainty, say what is going to happen to home prices over the next decade, I think it is safe to say that any appreciation we may see will be modest until our economy is back on track which may be some time. In the meantime I wonder if leasing a home may become a more popular option for people, even prior homeowners, that don’t want to risk the financial anguish and pain they may have felt over the past couple of years again, and may instead choose to look at providing shelter for their family from more of a business standpoint….in other words, where will they get the most bang for their buck…owning or renting?

home-prices-actual-vs-median-rent-chart

February Existing Home Sales Vary By Region and Price

Dennis Norman

Dennis Norman

According to the latest report from the National Association of REALTORS(R), existing home sales in the US in February decreased 0.6 percent to a seasonally adjusted-annual rate of 5.02 million units in February from a revised level of 5.50 million units in January, however this does represent an increase of 7.0 percent from a year ago when the rate was 4.69 million units (seasonally adjusted).

February’s Numbers Show Real Estate is “Local”

Reinforcing the fact that “all real estate is local” the February Existing Home Sales report paints quite a different picture of the housing market depending upon the region of the country:

  • Northeast region – February sales increased by 2.4 percent from January and were up 12.0 percent from a year ago
  • Midwest region – February home sales increased by 2.8 percent from January and were up 8.8 percent from a year agao.
  • South region – February home sales decreased by 1.1 percent from January but were up 6.9 percent from a year ago.
  • West region – February home sales decreased by 4.7 percent but were up 3.4 percent from a year ago.

Less is More

Over 72 percent of all existing home sales in February in the US (72.2 percent) were at sales prices of $250,000 or less with almost 36 percent of those sales being $100,000 or less. While most of the sales were in these lower price ranges, sales of higher priced homes in February were significantly higher than a year ago:

nar-feb-2010-existing-home-sales-by-price

Source: National Association of REALTORS

Lawrence Yun, NAR chief economist, said widespread winter storms in February may mask underlying demand. “Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said. “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers, particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:

  • There were 302,000 existing homes sold in February which is a 9.8 percent increase from January’s 275,000 sales and a 7.9 percent increase from February, 2009’s sales of 280,000 units.
  • Below are highlights from each region:
    • Northeast – 52,000 homes sold in February, 2010, an increase of 26.8 percent from January and an increase of 13.0 percent from the year before.
    • Midwest – 68,000 homes sold in February, 2010, an increase of 25.9 percent from January and an increase of 9.7 percent from the year before
    • South – 113,000 homes sold in February, 2010, an increase of 8.7 percent from January and an increase of 7.6 percent from the year before.
    • West – 69,000 homes sold in February, 2010, a decrease of 9.2 percent from January and a increase of 3.0 percent from the year before.

Other highlights of the NAR Report:

  • Median price of homes sold in February in the US was $165,100, about the same as January’s revised median sale price of $164,900 and is 1.8 percent less than the median price from a year ago.
  • Distressed sales accounted for 35 percent of all home sales in February, a decrease of 7.8 percent from January’s rate of 38 percent.
  • First-Time homebuyers accounted for 42 percent of the home sales in February, up from 40 percent in January.
  • Investors were the buyers of 19 percent of the homes in February, up from 17 percent in January.
  • Repeat home buyers were responsible for approximately 39 percent of February’s sales down from January’s 43 pecent..
  • Total housing inventory at the end of February was 3,589,000 homes for a 8.6 month supply, an increase of 10.3 percent from last months 7.8 month supply.

My Take On the Numbers:

I’m somewhat encouraged by this report and think that it supports my theory that the housing market, at least in many areas of the country, is toying with the “bottom”. I think we are going to see the market fluctuate “near the bottom” for some time and then we will see a recovery that I think will take some time to mature.

What to look out for:

  • Interest rates – Rates ALWAYS have an affect on the housing market…presently we have near record-low rates, however the Fed Reserve is indicating they will stop purchasing mortgage-backed securities in the next few days and industry experts feel this will lead to higher interest rates.
  • Tax Credits– By all indications the homebuyer tax credits have played a role in getting buyers to pull the trigger and has contributed to home sales. The credits come to an end April 30th, unless extended by Congress which I feel is doubtful, and then we will see what happens to the market afterward. First-time buyers, the biggest benificiaries of the credit, make up 40 percent of the sales currently, so they are s significant component.
  • Foreclosures – Foreclosures, REO’s and short-sales all put negative pressure on the housing market in terms of home prices and there is no end in site.
  • Underwater Borrower Sentiment– There are a record number of people “underwater” on their homes (owe more than their homes are worth) but, according to Robert Shiller, a noted economist, 80 percent of those borrowers still feel like they should continue to pay their mortgages and stick it out. According to a recent report by First Amercian CoreLogic, this sentiment changes dramatically once homeowners exceed 25 percent negative equity or exceed $70,000 in negative equity…according to the same report the average negative equity for underwater borrowers at the end of 2009 was $70,700. The number of underwater homeowners was 11.3 million at the end of 2009; if the sentiment of these homeowners change and they start walking away from their homes, look out housing market!

Pending Home Sales Drop In January; Weather Named as Cause

Dennis Norman

 Today the National Association of REALTORS released it’s January Pending Home Sales Index showing a decrease of 7.6 percent in the index from December, 2009 to January 2010 (seasonally adjusted) and a 12.3 percent increase from last year.

Here are highlights from the report:

  • January”s pending home sales index (seasonally adjusted) was 90.4 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which was a decrease of 7.6 percent in the index from December’s revised index of 97.8 and an increase of 12.3 percent from January, 2009 when it was 80.5.
  • January”s not-seasonally adjusted index index was at 74.4, an increase of 17.7 percent from December and an increase of 8.8 percent increase from a year ago.

Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.

St. Louis Real Estate – Realtor Pending Home Sales Index shows Real Estate Market Leveling off

Dennis Norman

 Today the National Association of REALTORS released it’s December Pending Home Sales Index showing an increase of 1.0 percent in the index from November (seasonally adjusted) and a 10.9 percent increase from last year. 

Here are highlights from the report:

  • December”s pending home sales index (seasonally adjusted) was 96.6 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year) which was a 1.0% increase in the index from November and an increase of 10.9 percent from the year before.
  • December”s not-seasonally adjusted index index was at 64.0, a 18.1 percent decrease from November and a 10.5 percent increase from a year ago.

Oh yeah, now that I have given my take on things, you can see what Lawrence Yun, the chief economist for NAR, has to say about it:

December home sales plummet but 2009 finishes stronger than 2008

Dennis Norman

Dennis Norman

NAR’s “seasonally-adjusted” numbers show sales down 16.7 percent for the month…2009 finishes with 5,156,000 homes sold…My projection for the year was 5,143,000 homes….missed it by 13,000 (2/10 of 1 percent) hmm..not bad for a “non-economist” :)

According to the latest report from the National Association of REALTORS(R), existing home sales in December decreased 16.7 percent to a seasonally adjusted-annual rate of 5.45 million units in December from a revised level of 6.54 million units in November, and are 14.9 percent higher than the 4.74 million-unit pace in December 2008.

NAR’s Chief Economist, Lawrence Yun, said “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit.” I agree with his comment and think this month’s data shows my analogy last month of comparing the increase in homes sales to a kid’s sugar rush was proven right by the sales numbers released today.

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers, particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

When looking at the ACTUAL Existing Home sales reported by NAR I found that home sales actually declined 12.1 percent from November’s sales of 471,000 units to 414,000 units in December. Comparing sales for December 2009 to the year before there was an increase of 14.7 percent.

We ended 2009 with 5,156,000 homes sold compared with 4,913,000 for 2008 reflecting an increase of 4.9 percent. In 2007 there were 5,652,000 homes sold putting 2009 9.6 percent behind 2007 in number of homes sold.

Other highlights of the NAR Report:

  • Median price of homes sold in December in the US was $178,300, an increase of 4.9 percent from November’s revised median price of $170,000 and an increase of 1.5 percent from December 2008 when the price was $178,700.
  • For all of 2009 the median price of homes sold was $173,500 down 12.4 percent from 2008’s median price of $198,100.
  • Distressed sales accounted for 32 percent of all home sales in December and for 36 percent of all home sales for 2009.
  • Total housing inventory at the end of December was 3,289,000 homes for a 7.2 month supply, an increase of 10.8 percent from last months 6.5 month supply.

Let’s play ‘spin the data’

Dennis Norman

Or should I say “It’s all in the headline”?

 

So what am I talking about? The pending home sales data that was released by the National Association of REALTORS today, of course. Actually I could be referring to any data on the housing market whether new home sales, foreclosure rates, interest rates, existing home sales or inventories of homes for sale.

There only major housing report that was released today was the Pending Home Sales Index for November by NAR. Being a report based upon data you would think the numbers speak for themselves; ah, but that is before the “spin” gets put on the data, beginning with the headlines (or in blog post titles…OK, I’m a big boy, I’ll admit it, the titles of my blog posts reflect my view of the data).

So here is how it went this morning after the Pending Home Sales data came out:

NAR’s press release headline: “Pending Home Sales Down From Surge but Higher Than a Year Ago”

Fox Networks Breaking business news headling: “PENDING HOME SALES DROP 16% IN NOVEMBER, LARGEST DECLINE ON RECORD”

Hmm…NAR says sales “down” but hey, higher than a year ago (remember a year ago, one of the worst housing markets since the depression….do you feel better knowing we are beating that year?

Fox says “largest decline on record”….wow, that sounds ugly especially since 2009 is supposed to end up being a better year for home sales than 2008.

So what is reality? Or at least reality in my opinion (for whatever that is worth) based upon the data?

For starters, remember the Pending Home Sales Index is probably, in my humble opinion, one of the least accurate indicators of the housing market that NAR produces. Why? Well, for starters, the index counts a “sale” as pending “when the contract has been signed but the transaction has not closed” and is based on a national sample typically representing “about 20 percent of transactions for existing-home sales”. Therefore there is a lot of room for error, not to mention there is an increasing percentage of “sales” that do not close today due to appraisal issues, financing issues, short sales that are not approved, etc. The index is strictly based upon “quantity” of contracts to buy, not necessarily “quality” of contracts to buy.

Having said that, let’s look at the numbers:

  • November’s pending home sales index (seasonally adjusted) was 96.0 (the index is based upon 100.0 being equal to the average level of sales activity in 2001 which we could call the last “normal” year)
  • November’s index was down 16.0 percent from October’s revised index of 114.3 and up 15.5 percent from November, 2008’s index of 83.1
  • November’s index was the lowest since June, 2009 when the index was 94.6
  • November’s pending home sales index (NOT seasonally adjusted) was 78.4, down 27.7 percent from October, up 19.3 percent from a year ago and the lowest index since February, 2009 when the index was 75.3

What I make of these numbers is that people were scrambling to buy homes before the homebuyer tax credit expired on November 30th (it has since been extended) and that produced “unseasonally” high numbers for the few months proceeding the deadline. However, by November this surge was over and things settled down.

So what would I have made the title of this post if I wasn’t trying to be clever? “Pending home sales drop after a “sugar-rush” caused by expiring tax credits”

Oh yeah, now that I have given my take on things, you can see what Lawrence Yun, the chief economist for NAR, has to say about it.

‘Actual’ Existing home sales drop 5.2 percent in November; Up 4.2 percent from a year ago

Dennis Norman

Dennis Norman

NAR’s “seasonally-adjusted” numbers show sales up 7.4 percent for the month…”actual” numbers show a 5.2 percent decrease….Sales up 44 percent from last year, lest we not forgot last year was the worst in over 10 years…

According to the latest report from the National Association of REALTORS(R), existing home sales in November increased 7.4 percent to a seasonally adjusted-annual rate of 6.54 million units in November from a revised level of 6.09 million units in October, and are 44.1 percent higher than the 4.44 million-unit pace in November 2008. Existing home sales are now at the highest level since February 2007 when it hit 6.55 million.

 

NAR’s Chief Economist, Lawrence Yun, said of the increase in existing home sales “This clearly is a rush of first-time buyers not wanting to miss out on the tax credit…”. I agree but would describe the effect of the homebuyer tax credits on the housing market like a kid’s sugar rush; the same analogy I used in a post about the spike in new home sales, which was followed a report earlier this week of new home sales taking a dive the following month.

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers, particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

When looking at the ACTUAL Existing Home sales reported by NAR I found that home sales actually declined 5.2 percent from October’s sales of 498,000 units to 472,000 units in November. Comparing sales for November 2009 to the year before there was an increase of 46.6 percent but don’t forget, buyers we’re racing the clock to buy a home before the credit expired (it has since been extended).

Through November 30, 2009, there have been 4,743,000 homes sold compared with 4,552,000 at the same time last year for an increase of 4.2 percent. Now, while this is good, to keep it in perspective we have to remember we are comparing our current numbers to a year that saw the lowest number of existing homes sold in over 10 years. I’m not being a pessimist, I’m just saying we need to take this for what it is…baby steps toward a leveling-off of the market.

Other highlights of the NAR Report:

  • Median price of homes sold in November in the US was $172,600, ab about the same as October’s revised median price of $172,200 and down 4.3 percent from November, 2008 when the price was $180,300.
  • Distressed sales accounted for 33 percent of all home sales in November, up from 30 percent in October.
  • Total housing inventory at the end of November was 3,520,000 homes for a 6.5 month supply (based upon “seasonally adjusted rate of sale”) – by my calculations, based upon my estimate of sales of 5.143 million homes for 2009, I say the supply is equal to about 8.2 months. (Beware of the growing “shadow inventory” though…more on that later)

Most recent homebuyers are first-time buyers

According to NAR 51 percent of recent homebuyers are first-time buyers and 39 percent of recent home sales have relied on an FHA loan

Dennis Norman

The National Association of REALTORS just released a report showing that 51 percent of the homes sold recently have been to first-time home buyers and that 39 percent of all recent buyers have turned to an FHA loan for financing for their home purchase.

I think this clearly illustrates that the first-time home buyer tax credit, coupled with record low interest rates and drastically reduced home prices, is giving buyers, at least first-time home-buyers, the confidence to move forward in their decision to purchase a home. Oh what I wouldn’t give to be a first-time home-buyer today!

“FHA helps provide affordable mortgage financing to homeowners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

Pending home sales rise for ninth consecutive month

yun_lawrence_100x144

Lawrence Yun, Chief Economist, NAR

Is the increase real or have the tax-credits created an “artificial” market that cannot be sustained?

Today the National Association of REALTORS(R) issued their Pending Home Sales Index Report for October showing pending sales in the U.S. rose again for the ninth consecutive month – marking the longest streak since since NAR began the pending home sale index in 2001.

As I have expressed previously, I’m somewhat cautious about getting too excited about these recent encouraging reports on the housing market as I feel we still have many challenges out there.

Dennis Norman
Dennis Norman

For starters, the home-buyer tax credit which has clearly stimulated the market as buyers raced to buy a home to claim the credit before it expired on November 30, 2009 (it has since been extended to April 30, 2010) is just creating an “artificial” market in my opinion and we are still seeing nearly record numbers of foreclosures and mortgage delinquencies which are going to continue to put downward pressure on the market. An unemployment rate in excess of 10 percent isn’t helping either. Continue reading “Pending home sales rise for ninth consecutive month

Home buyer tax credit extension update; House Passes Bill…On to President for approval

Dennis Norman

Dennis Norman

UPDATE 11/06/09 5:14 p.m. – Thanks to Denis T who was commenting on this post, click here to go to the IRS site with information on the new tax credits.

UPDATE 11/06/09 1:00 p.m. – I just heard that a short while ago President Obama signed the bill into law.  IT’S OFFICIAL!  So if you are in the market for a home .. Go For It!

Continue reading “Home buyer tax credit extension update; House Passes Bill…On to President for approval

Home buyer tax credit update-November 2, 2009

Dennis Norman

Dennis Norman

UPDATED: 6:15 pm Central Time-

The Senate voted 85-2 this afternoon to end debate on the amendment..This is clears a procedural hurdle and will allow the bill and amendment to be voted on by the Senate, most likely on Tuesday or Wednesday….If passed by the Senate it would then need to go back to the House for passage and then on to the President.

Here’s the latest info I have on the possible extension of the home-buyer tax credit:

The Dodd-Lieberman-Isakson Amendment I spoke of in last Friday’s update was added to the unemployment bill and has not yet been voted on by the Senate, but is expected to be voted on this week. Assuming the Senate passes the bill, it will then go to the House where, according to the latest information from the National Association of REALTORS(R), it is expected to accept the Senate amendments, vote on the package and send it to the President for his signature. The White House has indicated that President Obama will sign the legislation. Continue reading “Home buyer tax credit update-November 2, 2009

Pending home sales in midwest rise 8.1 percent in September

yun_lawrence_100x144

Lawrence Yun, Chief Economist, NAR

Today the National Association of REALTORS(R) issued their Pending Home Sales Index Report for September showing pending sales in the U.S. rose again for the eighth consecutive month – marking the longest streak since since NAR began the pending home sale index in 2001.  The pending home sales index for the US rose 6.1 percent from August.  Here in the Midwest the pending home sales index rose 8.1 percent from August marking the third month in a row the index in the Midwest increased.

As I have expressed previously, I’m somewhat cautious about getting too excited about these recent encouraging reports on the housing market as I feel we still have many challenges out there.

Dennis Norman
Dennis Norman

For starters, the home-buyer tax credit, which was stimulated home sales in the past couple of months, is set to expire the end of this month. Congress may extend it and if so that will be another shot in the arm for the housing market however we are still seeing nearly record numbers of foreclosures and mortgage delinquencies which are going to continue to put downward pressure on the market. The nearly 10 percent unemployment rate isn’t helping either. Continue reading “Pending home sales in midwest rise 8.1 percent in September

Home buyer tax credit update-October 30, 2009

Dennis Norman

Dennis Norman

In yesterday’s update I had some rather encouraging news about the possible extension of the first-time home buyer tax credit of $8,000 that has stimulated some home buying but is set to expire on November 30th. The good news was that there is an agreement amongst the powers that be with regard to extending the home buyer tax credit, which in itself is a HUGE step toward getting the credit extended, but as I said yesterday, “the fat lady hasn’t sang yet”.

Based upon the latest news I just received in an email update from the National Association of REALTORS(R) I would say the lady has not quite taken the stage yet. The Dodd-Lieberman-Isakson Amendment (the agreement I was referring to above by the “powers that be”) ended up being added to the Unemployment Insurance bill. As I mentioned yesterday they were deciding whether to add it as an amendment to this bill or make it a stand-alone bill. Obviously they made the decision. Apparently the Senate needs to reach an agreement on procedure in order to schedule a vote on the Unemployment Insurnace extension and they were not able to do that yet. NAR is reporting that the next action is expected to be: Continue reading “Home buyer tax credit update-October 30, 2009

Home buyer tax credit update

Dennis Norman

Dennis Norman

I have been talking a lot lately about the first-time home buyer tax credit of $8,000 that has stimulated some home buying but is set to expire on November 30th. I have also shared the efforts by organizations such as the National Association of REALTORS, The Mortgage Bankers Associaiton, The National Association of Home Builders and Fix Housing First to urge Congress to extend the home buyer tax credit as well as expand it to include more than just first-time home buyers.

Unfortunately there are some inaccurate reports I’m seeing this morning that indicating the Senate has passed a bill to extend the home-buyer taxcredits, which is not true, yet. However, I am happy to report that progress is being made though! According to an email I just released by the National Association of REALTORS: Continue reading “Home buyer tax credit update