NAR Report: Market Could Stabilize as More Homes are Listed

NAR Report: Market Could Stabilize as More Homes are Listed
National Association of REALTORS® | September 20, 2018

Existing-home sales remained mostly flat in August, bringing relief to markets following four consecutive months of decreases. Sales gains in the Northeast and Midwest helped to offset downturns in the South and West last month, according to the National Association of REALTORS®’ existing-home sales report, released Thursday.

Existing-home sales—which are completed transaction for single-family homes, townhomes, condos, and co-ops—remained at a seasonally adjusted annual rate of 5.34 million in August, the same as July. Sales are 1.5 percent below a year ago, NAR reports.

“Strong gains in the Northeast and a moderate uptick in the Midwest helped to balance out any losses in the South and West, halting months of downward momentum,” says Lawrence Yun, NAR’s chief economist. “With inventory stabilizing and modestly rising, buyers appear ready to step back into the market.”

Here’s a closer look at some of the findings:

  • Home prices: The median existing-home price for all housing types was $264,800—up 4.6 percent from a year ago.
  • Inventory: Total housing inventory at the end of August was at 1.92 million existing homes for sale, up from 1.87 million a year ago. Unsold inventory is at a 4.3-month supply at the current sales pace.
  • Days on the market: Properties stayed on the market an average of 29 days in August, down from 30 days a year ago. Fifty-two percent of homes sold in August were on the market for less than a month. “While inventory continues to show modest year over year gains, it is still far from a healthy level and new home construction is not keeping up to satisfy demand,” Yun says. “Homes continue to fly off the shelves with a majority of properties selling within a month, indicating that more inventory—especially moderately priced, entry-level homes—would propel sales.”
  • All-cash sales: All-cash sales comprised 20 percent of transactions in August, unchanged from a year ago. Investors tend to make up the biggest bulk of all-cash sales. They made up 13 percent of home sales in August, down from 15 percent a year ago.
  • Distressed sales: Foreclosures and short sales accounted for 3 percent of sales in August, the lowest reading since NAR began tracking such data in October 2008. Broken out, 2 percent of sales were foreclosures and 1 percent were short sales.

“We are probably seeing a reaction to the uncertainty around how sustainable recent price increase will be in the near future,” says Ruben Gonzalez, chief economist at Keller Williams. “Nationally, we expect sales to continue to track slightly below last year’s levels as inventory starts to move upward.”

Source: National Association of REALTORS®; REALTOR® Mag News, 092018

Nationally: Sky-High Home Prices Shatter Ceiling Again

Nationally: Sky-High Home Prices Shatter Ceiling Again
National Association of REALTORS® | July 23, 2018

Ongoing inventory shortages helped to push the median sale price for existing homes to another all-time high in June, the National Association of REALTORS® reports. The median price for all housing types was $276,900, surpassing a previous record set in May. Home prices have surged 5.2 percent since a year ago.

June2018NARsnapshotThe mix of low inventory and high home prices may have had influence on existing-home sales in June, which fell for the third consecutive month. Total existing-home sales, which include completed transactions for single-family homes, townhomes, condos, and co-ops, declined 0.6 percent to a seasonally adjusted annual rate of 5.38 million. Sales are now 2.2 percent lower than a year ago, with drops in the South and West offsetting gains in the Northeast and Midwest.

“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” says NAR Chief Economist Lawrence Yun. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and, in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”

Here’s a closer look at key indicators from NAR’s June housing report:

  • Inventory: Total housing inventory rose 4.3 percent to 1.95 million existing homes available for sale, which is 0.5 percent higher than a year ago. That marks the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace.
  • Days on the market: Fifty-eight percent of homes sold in June were on the market less than a month. Properties, on average, stayed on the market for 26 days, down from 28 days a year ago. “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” Yun says. “Furthermore, it remains to be seen if this modest increase will stick given the fact that the robust economy is bringing more interested buyers into the market and new-home construction is failing to keep up.”
  • First-time buyers: First-time buyers comprised 31 percent of sales, down from 32 percent a year ago.
  • All-cash sales: All-cash transactions made up 22 percent of transactions, up from 18 percent a year ago. Individual investors account for the biggest bulk of cash sales. Investors comprised 13 percent of home sales in June, unchanged from a year ago.
  • Distressed sales: Foreclosures and short sales made up 3 percent of sales, the lowest since NAR began tracking such data in October 2008. Distressed sales are down 4 percent from a year ago. Broken out, 2 percent of sales were foreclosures, and 1 percent were short sales.

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Source: National Association of REALTORS®; REALTOR® Magazine 072318

Yun: Spring Was the Season of ‘Unmet Expectations’

Yun: Spring Was the Season of ‘Unmet Expectations’
National Association of REALTORS® | June 27, 2018

1806_May_PHSFor the fifth consecutive month, pending home sales dropped in May—a sign that the recently ended spring buying season didn’t live up to the hype typical for real estate’s traditionally busiest time of year, the National Association of REALTORS® reported Wednesday. Contract signings also eased last month, and a significant sales decline in the South offset gains in other regions of the country.

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 0.5 percent in May to a reading of 105.9. The index is down 2.2 percent on an annual basis. NAR Chief Economist Lawrence Yun says this year’s spring buying season will be remembered as one of “unmet expectations,” with pending home sales at the second lowest level in the past year. He says inventory shortage is the main culprit. “REALTORS® in most of the country continue to describe their markets as highly competitive and fast-moving, but without enough new and existing inventory for sale, activity has essentially stalled,” Yun says.

However, buyer demand hasn’t slowed, which is evident in quicker sales and strong price growth, Yun says. The troubling reality is that gains in home prices continue to outpace income growth, housing inventory has fallen for 36 consecutive months, and listings typically go under contract in just over three weeks.

“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market,” Yun says. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”

Source: National Association of REALTORS®; REALTOR® Magazine Online 062718

Upbeat Sellers Show Readiness to Make a Move

Upbeat Sellers Show Readiness to Make a Move
National Association of REALTORS® | June 21, 2018

Home prices are climbing across the country, and that has made homeowners more bullish when it comes to the prospects of selling. Seventy-five percent of more than 2,700 households recently surveyed say it’s a good time to sell a house; 68 percent say it’s a good time to buy, according to the National Association of REALTORS®’ second quarter Housing Opportunities and Market Experience (HOME) survey.

“Hopefully this strong seller optimism will lead to an increase in inventory later on in the year,” says Lawrence Yun, NAR’s chief economist.

Fifty-five percent of consumers say they believe that home prices will continue to increase in their communities over the next six months, up from the previous quarter (53 percent), according to NAR’s report.

In the second quarter, however, optimism for buying stayed stagnant. Thirty-nine percent of consumers strongly agree now is a good time to buy, while 29 percent moderately agree. A decreasing number of renters are upbeat about buying, dropping from 55 percent in the first quarter to now 49 percent in the second quarter. Optimism for buying is highest among older buyers 65 or over, as well as those living in the South and Midwest regions, the report found.

“Inventory remains the driving force in real estate, affecting everything from rising prices to household formation,” Yun says. “Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers.”

Overall, consumers are more optimistic about the economy. Fifty-eight percent of households surveyed said they thought the economy was improving, with people in rural areas the most upbeat about economic conditions, according to the survey.

Their optimism over the economy has also helped more consumers believe that they would have an easier time to obtain a mortgage. “This is most likely a reflection of the current positive outlook on the direction of the economy,” Yun says. “Healthy job creation and faster wage growth mean that homeownership is viewed as a more attainable goal than it was a year ago.”

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Source: “Q2 Housing Opportunities and Market Experience (HOME) Survey,” National Association of REALTORS® (June 21, 2018); REALTOR® Magazine 062118

Nationally: New-Home Construction Surges to Highest Level in Decade

Nationally: New-Home Construction Surges to Highest Level in Decade
National Association of Home Builders | June 20, 2018

House 1052More new homes entered the pipeline in May than any other month since the end of the Great Recession. Total housing starts increased 5 percent in May to a seasonally adjusted annual rate pace of 1.35 million units, the Commerce Department reported Tuesday. That marks the highest housing starts since July 2007.

Broken out, single-family starts rose 3.9 percent to 939,000 units in May—the second-highest reading since the Great Recession. The multifamily sector increased 7.5 percent to 414,000 units. Single-family and multifamily production are now 9.8 percent and 13.6 percent higher, respectively, than a year ago.

“New-home construction activity soared to its highest level in over a decade, which is fantastic news as more housing inventory will be available as the year proceeds,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Moreover, construction and real estate industry jobs are being created and boosting the economy. [As a result,] GDP growth of 4 percent to 5 percent is possible in the second quarter.”

The Midwest saw the biggest jump in housing production last month, with combined single-family and multifamily housing starts rising 62.2 percent. Meanwhile, starts fell 0.9 percent in the South, by 4.1 percent in the West, and by 15 percent in the Northeast.

“The Midwest region experienced the biggest gain and hence the region will remain more affordable,” Yun notes. “The more unaffordable West region will continue to experience an intense housing shortage, as both housing permits and housing starts fell in that region. For the country as a whole, an additional 20 percent to 25 percent gain in home construction is needed to make the market more balanced.”

Housing starts will likely hit a snag in the coming weeks. Permits—a gauge of future activity—fell 4.6 percent in May to 1.3 million units. The biggest drop in permits was in the multifamily sector, which saw permits tumble 8.7 percent to 457,000. Single-family permits dropped 2.2 percent to 844,000.

“Ongoing job creation, positive demographics, and tight existing home inventory should spur more single-family production in the months ahead,” says Robert Dietz, the National Association of Home Builders’ chief economist. “However, the softening of single-family permits is consistent with our reports showing that builders are concerned over mounting construction costs, including the highly elevated prices of softwood lumber.”

Source: National Association of Home Builders; REALTOR® Mag Online, 062018

Nationally: Sales Struggle to Overcome Housing Shortages

Nationally: Sales Struggle to Overcome Housing Shortages
National Association of REALTORS®
article by Daily Real Estate News | May 24, 2018

Blame it on the low inventory of available property: Total existing-home sales failed to gain traction in April, according to the National Association of REALTORS® latest housing report, released Thursday.

Total existing-home sales—which are completed transactions that include single-family homes, townhomes, condos, and co-ops—decreased 2.5 percent to a seasonally adjusted annual rate of 5.46 million in April. Sales are now 1.4 percent below a year ago. This also marks the second consecutive month sales have fallen on an annual basis.

Regional Breakdown  The following is a breakdown of existing-home sales across the country in April:

  • Northeast: existing-home sales dropped 4.4 percent to an annual rate of 650,000, and are now 11 percent below a year ago. Median price: $257,200—2.8 percent higher than a year ago.
  • Midwest: existing-home sales were unchanged month-over-month at an annual rate of 1.29 million in April, and are 3 percent below a year ago. Median price: $202,100—up 4.6 percent from a year ago.
  • South: existing-home sales dropped 2.9 percent to an annual rate of 2.33 million in April, but are still 2.2 percent above a year ago. Median price: $227,600—up 3.9 percent from a year ago.
  • West: existing-home sales dropped 3.3 percent to an annual rate of 1.19 million in April and are 0.8 percent below a year ago. Median price: $382,100—up 6.2 percent from a year ago.

“The root cause of the underperforming sales activity in much of the country so far this year continues to be the utter lack of available listings on the market to meet the strong demand for buying a home,” says Lawrence Yun, NAR’s chief economist. “REALTORS® say the healthy economy and job market are keeping buyers in the market for now even as they face rising mortgage rates. However, inventory shortages are even worse than in recent years, and home prices keep climbing above what many home shoppers are able to afford.”

For the inventory that is out there, homes are selling fast. Strong buyer demand mixed with low inventory levels are prompting homes to sell at a record pace.

Here’s a closer look at some of the key indicators from NAR’s latest housing report:

Home prices: The median existing-home price for all housing types in April was $257,900, up 5.3 percent from a year ago.

Inventories: Total housing inventory at the end of April rose 9.8 percent to 1.80 million existing homes available for sale. Inventories are still 6.3 percent lower than a year ago. Unsold inventory is at a four-month supply at the current sales pace.

Days on the market: Properties stayed on the market an average of 26 days in April, down from 29 days a year ago. Fifty-seven percent of homes sold in April were on the market for less than a month.

“What is available for sale is going under contract at a rapid price,” Yun says. “Since NAR began tracking this data in May 2011, the median days a listing was on the market was at an all-time low in April, and the share of homes sold in less than a month was at an all-time high.”

All-cash sales: All-cash transactions comprised 21 percent of sales in April, unchanged from a year ago. Individual investors account for the biggest bulk of cash sales. Investors purchased 15 percent of homes in April, also unchanged from a year ago.

Distressed sales: Foreclosures and short sales made up just 3.5 percent of sales in April, the lowest since NAR began tracking such data in October 2008. That is also down from 5 percent a year ago. Broken out, 3 percent of April sales were foreclosures and 0.5 percent were short sales.

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Source: National Association of REALTORS®; REALTOR® Magazine Online, Daily Real Estate News 052418