Nationally: Existing-Home Sales Gains Strongest in Decade

Nationally: Existing-Home Sales Gains Strongest in Decade
National Association of REALTORS®   article by Daily Real Estate News | December 20, 2017

For the third consecutive month, existing-home sales were on the rise, with all major regions of the country except the West posting a “significant hike in sales activity” last month, the National Association of REALTORS® reported Wednesday.

dec16_DN_EHSInfographicTotal existing-home sales—which includes completed transactions for single-family homes, townhomes, condos, and co-ops—increased 5.6 percent in November to a seasonally adjusted annual rate of 5.81 million. Sales are now 3.8 percent higher than a year ago and are at the strongest pace since December 2006.

“Faster economic growth in recent quarters, the booming stock market, and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” says Lawrence Yun, NAR’s chief economist. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”

Here’s a closer look at November’s numbers:

Home prices: The median existing-home price for all housing types in November was $248,000, increasing 5.8 percent from a year ago.

Supply: Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale. Inventories are now 9.7 percent lower than a year ago. Unsold inventory is at a 3.4-month supply at the current sales pace. “The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” Yun says. “Price appreciation is too fast in a lot of markets right now. The increase in home builder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

Cash purchases: All-cash sales comprised 22 percent of transactions in November, up from 21 percent a year ago. That makes up the highest share of all-cash sales since May. Individual investors are the biggest source of cash sales. They purchased 14 percent of homes in November, unchanged from a year ago. “The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” Yun says. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”

First-time home buyers: This group accounted for 29 percent of sales in November, down from 32 percent a year ago.

Days on market: Properties remained on the market for an average of 40 days in November, down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.

Distressed properties: Foreclosures and short sales made up 4 percent of sales, down from 6 percent a year ago. Broken out, 3 percent of sales in November were foreclosures while 1 percent were short sales.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 122017

Home Sales Up as First-Time Buyers Re-Emerge

Home Sales Up as First-Time Buyers Re-Emerge
Article by Daily Real Estate News | July 21, 2016

REALTORlogoFirst-time home buyers flooded the market last month, reaching their greatest share in nearly four years, according to NAR’s latest housing report. Existing-home sales climbed across the country in June, except for the Northeast, as the summer continued to see high demand.

Existing-home sales rose 1.1 percent to a seasonally adjusted annual rate of 5.57 million in June, NAR reported. Sales are now up 3 percent compared to a year ago and are at the highest annual pace since February 2007.

JuneHighlights2016“Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” says Lawrence Yun, NAR’s chief economist. “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases.”

That said, Yun cautions whether the current sales pace can stretch much higher amid a still very limited number of homes for sale and rising home prices.

First-Time Buyer Rebound

First-time buyers comprised 33 percent of the market last month, the highest level since July 2012 (34 percent at the time), NAR reports.

“The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market,” says Yun. “The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply – particularly areas in the Midwest and parts of the South.”

5 Stats to Gauge the Market

Here is an overview of more key indicators from NAR’s latest housing report:

  1. Prices: Median-existing-home prices for all housing types in June was $247,700, increasing 4.8 percent from a year ago. June’s median price surpasses May’s peak median sales price of $238,900.
  2. Housing inventory: Unsold inventory is at a 4.6-month supply at the current sales pace, down from 4.7-months in May. Total housing inventory last month dropped 0.9 percent to 2.12 million existing homes available for sale. Inventory is 5.8 percent lower than a year ago.
  3. Days on the market: Forty-eight percent of homes sold in June were on the market for less than a month. Properties, on average, stayed on the market for 34 days in June, unchanged from a year ago. Short sales were on the market the longest amount of time at a median of 156 days; foreclosures sold in 49 days; and non-distressed homes sold in 30 days.
  4. Distressed sales: Foreclosures and short sales accounted for 6 percent of sales in June, down from 8 percent a year ago. In June, four percent of June sales were foreclosures, and 2 percent were short sales. Foreclosures sold, on average, for a discount of 11 percent below market value; short sales were discounted on average 18 percent.
  5. All-cash sales: All-cash sales comprised 22 percent of transactions in June, unchanged from a year ago. Individual investors, who account for a bulk of cash sales, purchased 11 percent of homes in June, the lowest share since July 2009.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 072116

KENNETH BARGERS REALTOR® License 318311 | Pilkerton Realtors License 257352
(615) 512-9836 cellular • (615) 915-5901 facsimilekb@bargers-solutions.com email
bargers-solutions.com webkennethbargers.com blogSearch Properties
(615) 371-2474 office • (615) 371-2475 facsimile • 2 Cadillac Drive, Brentwood TN 37027 address

First-Time Buyers Fuel Latest Sales Boost

First-Time Buyers Fuel Latest Sales Boost
Article by Daily Real Estate News | June 22, 2015

REALTORlogoExisting-home sales rose in May to their highest pace in nearly six years, largely attributed to a big rise in the number of first-time home buyers, according to the National Association of REALTORS®’ latest housing report, released Monday. All major regions saw sales increases in May, with the Northeast seeing the most notable rise.

Existing-home sales – measured as completed transactions of single-family homes, townhomes, condos, and co-ops – climbed 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. Sales are 9.2 percent above last year at this time.

The market share of first-time home buyers rose to 32 percent of transactions in May, matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers, NAR reports.

“The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low downpayment programs,” says Lawrence Yun, NAR’s chief economist. “More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise.”

As the supply of homes remain tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation, Yun notes. “Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above 4 percent,” Yun says.

5 Stats to Gauge the Market

Here’s an overview on key market conditions from NAR’s latest existing-home sales report:

  1. Inventory: Total housing inventory rose 3.2 percent to 2.29 million existing homes available for sale by the end of May. That is 1.8 percent higher than a year ago. Unsold inventory currently is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.
  2. Home prices: The median existing-home price for all housing types was $228,700 in May – nearly 8 percent above May 2014 home prices.
  3. Days on the market: Properties typically stayed on the market for 40 days in May, up from 39 days in April. Still, that marks the third shortest time since NAR began tracking days on the market in May 2011. Forty-five percent of homes sold in May were on the market for less than a month.
  4. All-cash sales: All-cash sales comprised 24 percent of transactions in May, down considerably from a year ago when they made up 32 percent of transactions. Individual investors, who account for the bulk of cash sales, purchased 14 percent of homes last month, down from 16 percent a year ago. Sixty-seven percent of investors paid cash in May.
  5. Distressed sales: Foreclosures and short sales remained at 10 percent for the third consecutive month in May. Distressed sales are below the 11 percent share a year ago. Seven percent of May sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in May while short sales were also discounted 16 percent.

Regional Breakdown

The following is a snapshot of how existing-home sales fared across the country in May:

  • Northeast: existing-home sales rose 11.3 percent to an annual rate of 690,000. Sales are now 11.3 percent above a year ago. Median price: $269,000, up 4.8 percent above May 2014 levels.
  • Midwest: existing-home sales rose 4.1 percent to an annual rate of 1.27 million in May. Sales are 12.4 percent above May 2014. Median price: $181,900, up 9.4 percent from a year ago.
  • South: existing-home sales increased 4.3 percent to an annual rate of 2.18 million in May, and are 6.9 percent above year ago levels. Median price: $198,300, up 8.2 percent from a year ago.
  • West: existing-home sales increased 4.3 percent to an annual rate of 1.21 million in May, and are 9 percent above a year ago. Median price: $324,000, up 10.2 percent above May 2014.

Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 062215

Bargers-Signature-Block

How the 2014 Housing Market Will Shape 2015

How the 2014 Housing Market Will Shape 2015
Daily Real Estate News | December 24, 2014

NAR LogoThe real estate market has shown a build-up of housing momentum this year – “fueled by significant improvements in economic fundamentals, low mortgage rates, and compressed inventory” – that will likely translate into larger gains in 2015, according to realtor.com®’s newly released 2014 Housing Review.

“Many of the gains that we recently predicted in the realtor.com® 2015 Housing Forecast are built on housing growth established in 2014,” says Jonathan Smoke, realtor.com®’s chief economist. “Overall, this year’s housing market showed steady advances over 2013 with significant improvement in key housing metrics, despite some remaining challenges. Increases in job creation and gross domestic product (GDP) have had a significant impact on consumer confidence and home buyer demand. Paired with historically low interest rates, these factors kept properties moving quickly with median time on market at approximately 90 days. Unfortunately, the low number of homes for sale and stringent lending standards prevented a normal number of first time home buyers from closing on their first home in 2014.”

Here are some of the trends realtor.com® notes from 2014 that will help drive a stronger 2015:

  • An improving economy: “After an especially harsh winter earlier in the year, the economy picked up steam and produced a banner year for new jobs,” realtor.com® notes in its report. “The GDP this year was higher, and is still trending higher, resulting in stronger consumer confidence.”
  • Low mortgage rates: Despite the end of the Federal Reserve’s quantitative easing this year, mortgage rates continued to decline and helped to lower borrowing costs of home buyers. In recent weeks, the 30-year fixed-rate mortgage has been below 4 percent.
  • Returns to normal price appreciation: “After two years of abnormally high levels of home price appreciation in 2012 and 2013, price increases moderated throughout 2014,” realtor.com® notes. “We are now experiencing increases in home prices consistent with long-term historical performance.”
  • Distressed sales decline: Foreclosures and short sales fell throughout the year. Foreclosures are projected to be down 30 percent year-over-year at the close of 2014.
  • Investor activity lessens: Coinciding with the drop in distressed sales and higher home prices, large-scale investor purchase activity in the single-family market decreased. Less competition from investors may offer more room for traditional first-time buyers to squeeze into the market.

However, the realtor.com® report notes several factors that continue to plague the housing recovery and prevent it from being stronger, including:

  • Tight credit standards: “Despite historically low rates, many households were prevented from capitalizing on mortgage access because of overlays lenders added to qualification standards in order to limit put-back risk,” realtor.com® notes. “A tight spread between approved and declined FICO scores shut out nearly half of the potential population this year. As a result, mortgage credit availability did not improve in 2014.”
  • Tight inventories of for-sale homes: Inventories did rise this year, but supply failed to outpace demand. The monthly supply of new homes and existing homes continued to fall beneath normal levels, and the age of inventory was down year- over-year.
  • Fewer first-time buyers: The share of first-time buyers dropped to the lowest level in nearly 30 years, according to the National Association of REALTORS®. “But the first-time buyer share is showing signs of modest improvement by the year-end,” says Lawrence Yun, NAR’s chief economist. Federal policy actions, such as revised regulations for lenders and new low down-payment programs introduced in December, are believed to have a positive impact in increasing first-time home buyer share in 2015.
  • Record levels of renters: The home ownership rate continued to fall this year as the number of renters increased. Rent increases have become an inflationary concern this year, and the pace of rental increases does not appear to be slowing down.
  • Sluggish new-home building: Single-family new-home starts barely budged in 2014 compared to 2013. New home sales remain far from normal levels. They are typically near 16 percent and instead remain around 9 percent. Still, new home prices rose substantially again this year, revealing that higher priced product is limiting the demand.

Source: realtor.com®; REALTOR® Magazine Online; Daily Real Estate News 122414

Bargers-Signature-Block

First-Time Buyers at Lowest Level in Decades

First-Time Buyers at Lowest Level in Decades
Article by Daily Real Estate News | November 03, 2014

REALTORlogoDespite an improving job market and low interest rates, the share of first-time buyers fell to its lowest point in nearly three decades, according to an annual survey released today by the National Association of REALTORS®.

NAR’s Profile of Home Buyers and Sellers dates back to 1981. The average rate of first-time buyers during that time has been around four out of 10 purchases. In this year’s survey, the share of first-time buyers dropped 5 percentage points from a year ago to 33 percent, representing the lowest share since 1987 (30 percent).

“Rising rents and repaying student loan debt makes saving for a downpayment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” says Lawrence Yun, NAR chief economist. “Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”

When asked about the primary reason for purchasing, 53 percent of first-time buyers cited a desire to own a home of their own. Most in this group say they plan to stay in their home for 10 years and they are 10 percent more likely to purchase a townhouse or a condo than repeat buyers. The median age of first-time buyers was 31, unchanged from the last two years, and the median income was $68,300 (up from $67,400 in 2013). The household composition of all buyers responding to the survey was mostly unchanged from a year ago; 65 percent were married couples, 16 percent single women, 9 percent single men, and 8 percent unmarried couples. Thirteen percent of survey respondents were multi-generational households, including adult children, parents and/or grandparents.

The typical first-time buyer purchased a 1,570 square-foot home costing $169,000. The survey also found that 47 percent of first-time buyers said the mortgage application and approval process was much more or somewhat more difficult than expected (an increase of four percent over last year). Among 23 percent of first-time buyers who said saving for a downpayment was difficult, more than half (57 percent) said student loans delayed saving, up from 54 percent a year ago.

In addition to tapping into their own savings (81 percent), first-time buyers used a variety of outside resources for their downpayment. Twenty-six percent received a gift from a friend or relative, with 6 percent receiving a loan from a relative or friend. Ten percent sold stocks or bonds, or tapped into a 401(k) fund. Ninety-three percent of entry-level buyers chose a fixed-rate mortgage, with 35 percent financing their purchase with a low-downpayment Federal Housing Administration-backed mortgage (down from 39 percent in 2013), and 9 percent using the Veterans Affairs loan program with no downpayment requirements.

“FHA premiums are too high in relation to default rates and have likely dissuaded some prospective first-time buyers from entering the market,” says Yun. “To put it in perspective, 56 percent of first-time buyers used a FHA loan in 2010. The current high mortgage insurance added to their monthly payment is likely causing some young adults to forgo taking out a loan.”

Source: “NAR Annual Survey Reveals Notable Decline in First-time Buyers,” National Association of REALTORS® (Nov. 3, 2014); Realtor Magazine Online, Daily Real Estate News 110414

KENNETH BARGERS, REALTOR® | Bargers Solutions real estate : marketing
a proud member of Pilkerton Realtors

(615) 512-9836 cellular | (615) 371-2474 office
kb@bargers-solutions.com email | www.bargers-solutions.com web
kennethbargers.com blog | www.pilkertonrealtors.com web

2 Cadillac Drive, Brentwood TN 37027 address

Subscribe BLOG: EMAIL ME your name/email address to receive Kenneth Bargers Blog
Subscribe NEWSLETTER: EMAIL ME your name/email address to receive In The News

let’s connect…

pinterest-logoyelp-logoabout-me-logogoogle-plus-logowordpress-logotwitter-logolinkedin-logofacebook-logo

 

 

Economist Calls for National Policy to Reinforce Home Ownership

Economist Calls for National Policy to Reinforce Home Ownership
Daily Real Estate News | September 15, 2014

In a recent column for HousingWire, Jonathan Smoke, chief economist at realtor.com®, breaks down the good and the bad of the housing recovery. He notes certain areas are close to a complete recovery, such as employment, home prices, distressed existing home sales, multifamily new construction, and rents. On the other hand, Smoke says the recovery is far from normal levels in terms of single-family new-home construction, mortgage applications and originations, household formation, and home ownership.

“The most negative sales signal comes from the new-home market, where new-home sales came in at an estimated annualized rate of 412,000 in July, the second lowest rate in the last 10 months,” Smoke notes. New-home permits and starts have failed to reach a pace that economists consider healthy for the sector, which is generally above one million.

Smoke points to another troubling area: Mortgage applications, which fell to the lowest level in 14 years at the beginning of September. Mortgage applications remain low despite the fact that rates are hovering near yearly lows.

“Mortgage applications are considered a leading indicator for future home sales, but I believe the decline is not so much a signal of another downturn in demand but rather an indication of a seriously hobbled housing credit market,” Smoke writes. He says many buyers are being sidelined due to a very “small credit box,” where only consumers with easily documented incomes, strong credit scores, and large down payments are able to qualify for financing on a home.

Another housing hurdle Smoke notes is the abnormal levels of supply and demand. “Affordable homes aimed at the first-time buyer segment are not being built,” he says. “Hedge funds bought up most of the affordable distress inventory over the last three years and have turned them into rentals. Home values have recovered the least in affordable price points, resulting in higher numbers of existing owners with negative equity and therefore unable to sell.”

Smoke says that the continuing declines in areas of home ownership will portend to bigger problems ahead for the overall economy.

“Without a strong housing policy, the mortgage market is incapable of adequately addressing risk-appropriate access to credit that supports home ownership,” Smoke writes. “Fundamentally, we need new directions for national housing policy to address the broken credit market, find solutions for affordability housing across all income levels, reinforce home ownership as the cornerstone of financial security, and fulfill the housing needs of older households.”

Source: “Economist: Here’s Why Mortgage Supply and Demand Isn’t Normal,” HousingWire (Sept. 12, 2014); REALTOR® Magazine Online, Daily Real Estate Magazine 091514

KENNETH BARGERS, REALTOR® | Bargers Solutions real estate : marketing
a proud member of Pilkerton Realtors

(615) 512-9836 cellular | (615) 371-2474 office
kb@bargers-solutions.com email | www.bargers-solutions.com web
kennethbargers.com blog | www.pilkertonrealtors.com web

2 Cadillac Drive, Brentwood TN 37027 address

Subscribe BLOG: EMAIL ME your name/email address to receive Kenneth Bargers Blog
Subscribe NEWSLETTER: EMAIL ME your name/email address to receive In The News

let’s connect…

pinterest-logoyelp-logoabout-me-logogoogle-plus-logowordpress-logotwitter-logolinkedin-logofacebook-logo

 

 

The Return of the First-Time Home Buyer?

The Return of the First-Time Home Buyer?
Daily Real Estate News | July 11, 2014

1403 RobertELee 1Young people are starting to leave their parent’s home and move out on their own. The Current Population Survey for 2013 showed a drop in the percentage of 20-somethings living with parents, marking the first decline since 2005.

As of now, the percentage drop appears minimal: Those aged 18 to 24 living with parents or a related subgroup dropped from 56 percent to 55 percent in one year. However, Brad Hunter, chief economist at Metrostudy, notes in a Builder online article that the one-percentage-point decline represents 300,000 people who are now looking for a household of their own that who were previously living with their parents.

Indeed, a recent report by Harvard University’s Joint Center for Housing Studies predicts that 2.7 million more households will form among people in their 30s over the next decade.

First-time buyers usually make up about 40 percent of home buyers. However, lately, the share has been in the 35 percent to 38 percent range, Hunter says. For existing-home sales, first-time buyers’ share is less than one-third of all buyers, at 27 percent in May, according to the National Association of REALTORS®.

The delay in millennials branching out on their own has greatly reduced household formation in recent years. Household formation rates usually average 1.4 million per year. Lately, the rate has been a fraction of that, about 500,000 to 700,000 a year.

“We are seeing some evidence that young people who had moved in with their parents or relatives are now finding the means and the motivation to move out and get their own place,” Hunter notes. “While most of these newly-emerging twenty-somethings will be going into rentals, the movement out of the parental home is nonetheless expected to support a series of positive steps from rentals to entry-level re-sales to entry-level new homes, and on up the ladder.”

Source: “First-Time Buyers and New-Home Demand: Reverting to Normal,” Builder (July 10, 2014); Daily Real Estate News (071114)

KENNETH BARGERS, REALTOR® | Bargers Solutions real estate|marketing
a proud member of Pilkerton Realtors

(615) 512-9836 cellular | (615) 371-2474 office
kb@bargers-solutions.com email | www.bargers-solutions.com web
kennethbargers.com blog | www.pilkertonrealtors.com web

2 Cadillac Drive, Brentwood TN 37027 address

Subscribe BLOG: EMAIL ME your name/email address to receive Kenneth Bargers Blog
Subscribe NEWSLETTER: EMAIL ME your name/email address to receive In The News

let’s connect…

pinterest-logotrulia-logoyelp-logoabout-me-logogoogle-plus-logowordpress-logotwitter-logolinkedin-logofacebook-logo