National Association of Realtors July Numbers Are In – Home Sales Tumble

Washington, August 24, 2010

Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors ®.

Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales “ accounting for the bulk of transactions “ are at the lowest level since May of 1995.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. œConsumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September, he said. œHowever, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

œEven with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years, Yun said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.56 percent in July from 4.74 percent in June; the rate was 5.22 percent in July 2009. Last week, Freddie Mac reported the 30-year fixed was down to 4.42 percent.

The national median existing-home price2 for all housing types was $182,600 in July, up 0.7 percent from a year ago. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009.3

œThanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses, Yun said. œOver the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.

Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply4 at the current sales pace, up from an 8.9-month supply in June. Raw unsold inventory is still 12.9 percent below the record of 4.58 million in July 2008.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said there are great opportunities now for buyers who weren™t able to take advantage of the tax credit. œMortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position, she said.

A parallel NAR practitioner survey shows first-time buyers purchased 38 percent of homes in July, down from 43 percent in June. Investors accounted for 19 percent of sales in July, up from 13 percent in June; the balance were to repeat buyers. All-cash sales rose to 30 percent in July from 24 percent in June.

Single-family home sales dropped 27.1 percent to a seasonally adjusted annual rate of 3.37 million in July from a pace of 4.62 million in June, and are 25.6 percent below the 4.53 million level in July 2009; they were the lowest since May 1995 when the sales rate was 3.34 million. The median existing single-family home price was $183,400 in July, which is 0.9 percent above a year ago.

Single-family median existing-home prices were higher in 11 out of 19 metropolitan statistical areas reported in July in comparison with July 2009 (the price in one of 20 tracked markets was not available). However, existing single-family home sales fell in all 20 areas from a year ago.

Existing condominium and co-op sales fell 28.1 percent to a seasonally adjusted annual rate of 460,000 in July from 640,000 in June, and are 24.0 percent below the 605,000-unit level in July 2009. The median existing condo price5 was $176,800 in July, down 1.7 percent from a year ago.

Regionally, existing-home sales in the Northeast dropped 29.5 percent to an annual pace of 620,000 in July and are 30.3 percent lower than a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009.

Existing-home sales in the Midwest fell 35.0 percent in July to a level of 800,000 and are 33.3 percent below July 2009. The median price in the Midwest was $151,600, down 2.8 percent from a year ago.

In the South, existing-home sales dropped 22.6 percent to an annual pace of 1.54 million in July and are 19.8 percent below a year ago. The median price in the South was $156,300, down 3.3 percent from July 2009.

Existing-home sales in the West fell 25.0 percent to an annual level of 870,000 in July and are 23.0 percent below a year ago. The median price in the West was $224,800, up 3.3 percent from July 2009.

The National Association of Realtors ®, œThe Voice for Real Estate, is America™s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

NOTE: NAR also tracks monthly comparisons of existing single-family home sales and median prices for 20 select metropolitan statistical areas, which is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors ®.

Houston Area Home Sales Drop With End of Tax Credit

Usually strong summer months see fewer buyers as inventory grows

By NANCY SARNOFF Copyright 2010 Houston Chronicle

Aug. 17, 2010, 11:49PM

Houston-area home sales took a sharp dive in July, after four straight months of gains fueled by a federal tax credit for home buyers.

Realtors sold 4,297 single-family homes last month, a 25.1 percent decline from the year earlier, according to monthly data released Tuesday by the Houston Association of Realtors.

Many of those who otherwise would be shopping now and in the coming months bought earlier in the year to take advantage of the tax credit for first-time and some repeat home buyers, which expired at the end of April. Buyers who qualified by then have until Sept. 30 to close the sales.

“Had the tax credit not been in play, we’d have stronger summer months,” said Margie Dorrance, the association’s chair and principal at Keller Williams Realty Metropolitan.

In two months, Douglas Parker hasn’t gotten one offer on his two-bedroom, two-bath Eastwood bungalow, which was featured on a neighborhood home tour.

He acknowledged he first priced the renovated Craftsman style house higher than what others were selling for in his transitional neighborhood inside Loop 610, but since then he’s dropped his asking price twice. The 1,396-square-foot home is now listed at $219,990.

Skittish potential buyers

If it sells for any less, Parker said, he’ll have to pay out of pocket with fees and closing costs.

“Eastwood was really hot for a while. Prices were on the rise, people were moving in left and right renovating houses,” said Parker, executive director at a local law firm. “Today, the real estate market has halted, and Eastwood has certainly felt that.”

Despite historically low interest rates, some buyers are still nervous about taking the plunge, said Ronnie Matthews of RE/MAX Legends.

“Our economy is in disarray, so naturally people are skittish,” he said.

Listings jump

While Houston’s housing market has held up better than other areas of the country, a full recovery doesn’t seem imminent. Early indications suggest August will be another down month.

Month-end pending sales for July totaled 3,267, down 16.4 percent from last year.

Moreover, the local market is facing a growing supply of available properties. The number of active listings at the end of July rose 18.6 percent from the year earlier to 55,247. That’s 1,313 more active listings than in June 2010.

Home prices slipped last month too. The median price for a single-family home in July fell 0.7 percent from the same month last year to $160,880. The median is the figure at which half of the homes sold for more and half sold for less.

Markets are soft

Prices are softest in neighborhoods that ring the Beltway with high numbers of foreclosures and recent new construction, Matthews said. Older areas with high foreclosure rates are suffering, too.

“You’ve got substantially more properties on the market, and you’ve got substantially fewer buyers looking,” he said. “Anyway you look at it it’s going to be a soft market for prices.”

Sales activity was down across the board last month. The biggest two segments of the market homes priced from $80,000 to $150,000 and from $150,000 to $250,000 – were off 29.2 and 35 percent, respectively.

High-end home sales tumbled 22.7 percent.

The data is based on residential properties and some new homes listed by Realtors on the Multiple Listing Service throughout Harris, Fort Bend and Montgomery counties, as well as parts of Brazoria, Galveston, Waller and Wharton counties.

 

** Kevin Says: These are very similiar trends I am seeing in the Dallas/Fort Worth Market.

Jumbo Loan Rates Drop!!

High End Home Sales Surge: JUMBO RATES TODAY ON A 30 YEAR FIXED 5.00% A significant decline in jumbo mortgage rates (loans above $417,000) are helping to move some of the highest-end inventory. Sales volumes of homes worth more than $1 million across the country are up more than 35% from this time last year according to the National Association of Realtors. They also stated that homes between $700,000 and a million were up 29% from last year.There is no question that high unemployment and concern about the economy is pressuring the housing market at all price points, but it is clear that the ultra-low mortgage rates are having a dramatic impact on the highest end of the price spectrum.Conventional lenders (Fannie Mae and Freddie Mac) do not make jumbo loans. The investors are becoming more comfortable making higher end loans and are looking to take advantage of a premium that they just can’t earn with a conventional mortgage where margins are thin. The return of the Jumbo Markets is positive for the Housing Industry.

Think Twice Before Writing That Offer Without Representation from a REALTOR…

In today™s struggling real estate market, buyers (especially first time home buyers) would be foolish to write an offer on a home and potentially obligate themselves to a binding contract without the representation of a licensed REALTOR.     I say this because within the One to Four Family Residential Contract (the form that almost all Texas REALTORS use for contracts on residential resale homes), there are so many deadlines, obligations and responsibilities for the buyer to meet, that without the professional guidance of a licensed REALTOR, a buyer could quickly get themselves into contractual default¦ probably without even knowing it!   One thing a buyer should definitely consider is the that fact that even though we are currently in a buyer™s market, if a buyer decides to make an offer on a house without representation from a REALTOR, and the seller™s are being represented by a REALTOR, that REALTOR has the fiduciary duty to represent all of the sellers interest¦ NOT the buyer™s interest.   Therefore, it is highly likely that the seller™s agent will not care to protect the buyer™s interest, unless the buyer agrees in writing to have that seller™s agent represent both the seller and the buyer.   Representation of both parties by only one agent is called intermediary.    In intermediary, the agent usually then collects one commission from representing the seller and another commission for representing the buyer(s).

 

Contractually speaking, here in Texas buyers are required to deliver monies to certain parties at the start of a new contract.   If those monies are not delivered to the correct place or by the correct time stated in the contract, the buyer may be in default of the contract and could face default penalties.   These penalties may include the forfeiture of the option period (the period where the buyer can back out of the contract for any reason), or worse, they may be forced to purchase the home if the seller decides to pursue that avenue.

 

Most REALTOR™s like myself are not lawyers, but once a buyer does decide to commit to work with an agent through what is called a Residential Buyer Representation Agreement, that buyer has just gone from being a stand-alone customer, to a fully represented client.   And when you become a client to a Texas REALTOR like myself, the information, representation and negotiation advantages that you will receive from your REALTOR, will be abundantly clear!