WASHINGTON (AP) — More Americans signed contracts to buy homes in July, a sign that buying has improved as mortgage rates have slipped, the number of listings has risen and the rate of price increases has slowed.
The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index rose 3.3 percent to 105.9 last month. Still, the index remains 2.1 percent below its level a year ago.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the increase “positive” but stressed that home buying was unlikely to strengthen significantly
“Sales cannot rise much more before they hit the fundamental problem that the pool of would-be buyers is just not big enough,” Shepherdson said.
The pressures that caused home sales to stall last year have started to ease. The average 30-year fixed mortgage rate has dropped to 4.1 percent, a 52-week low. Prices are no longer rising at double-digit annual rates, thereby helping to improve affordability.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
The number of signed contracts in the Northeast climbed 6.2 percent and is ahead of its pace last year. Pending sales also rose in the South and West, though the index for both regions remains below its levels in July 2013. Contracts in the Midwest fell 0.4 percent last month and also lag behind the pace of a year ago.
Modest wage growth, which has barely run ahead of inflation, has hampered home sales. The Realtors forecast that roughly 5 million existing homes will be sold this year, down from 5.1 million in 2013.
But price growth, which had hurt affordability at the end of last year, has moderated in recent months.
The Standard Poor’s/Case-Shiller 20-city home price index rose 8.1 percent in June from 12 months earlier, according to a report this week. Year-over-year price gains at the start of 2014 had averaged more than 13 percent, according to the Case-Shiller index.
And while more homeowners have started to list their properties for sale, the ability of the real estate market to grow is limited.
That’s largely due to the consequences of the housing bust that triggered the Great Recession at the end of 2007. Nearly 35 percent of homeowners are still “effectively underwater” on their mortgages: They either have less than 20 percent equity in their homes or they couldn’t sell their properties and have enough money left for a down payment on another home, the online real estate firm Zillow said this week.
Washington (AFP) – US pending home sales rebounded last month to their highest levels in nearly a year, the National Association of Realtors said Thursday, in report providing further evidence of a steadying housing market.
The NAR’s pending home sales index surged 3.3 percent in July to 105.9, its highest level since August 2013.
The increase in the forward-looking indicator, which is based on contract signings, came in much stronger than expected. The average estimate was for a modest 0.5 percent rise.
Pending home sales have climbed in four of the past five months. The June decline in pending home sales was steeper than first thought, with the drop revised to 1.3 percent from 1.1 percent.
Lawrence Yun, NAR chief economist, said that favorable housing conditions spurred increased contract activity last month.
“Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012,” he said.
“More importantly, steady job additions to the economy are helping family finances and giving them added confidence to enter the market.”
Compared with a year ago, July pending home sales were down 2.1 percent.
Yun projected sales of existing homes, the largest part of the housing market, to be down 2.1 percent this year to 4.98 million, compared with 5.09 million sales in 2013.
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US pending home sales rebounded last month to their highest levels in nearly a year, the National Association of Realtors said on Thursday (Aug 28), in report providing further evidence of a steadying housing market.
An exterior view of a house with a pending home sale sign in Palo Alto, California, USA. (AP/Paul Sakuma)
WASHINGTON: US pending home sales rebounded last month to their highest levels in nearly a year, the National Association of Realtors said on Thursday (Aug 28), in report providing further evidence of a steadying housing market. The NAR’s pending home sales index surged 3.3 per cent in July to 105.9, its highest level since August 2013.
The increase in the forward-looking indicator, which is based on contract signings, came in much stronger than expected. The average estimate was for a modest 0.5 per cent rise.
Pending home sales have climbed in four of the past five months. The June decline in pending home sales was steeper than first thought, with the drop revised to 1.3 per cent from 1.1 per cent.
Lawrence Yun, NAR chief economist, said that favorable housing conditions spurred increased contract activity last month. “Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012,” he said. “More importantly, steady job additions to the economy are helping family finances and giving them added confidence to enter the market.”
Compared with a year ago, July pending home sales were down 2.1 per cent. Yun projected sales of existing homes, the largest part of the housing market, to drop 2.1 per cent this year to 4.98 million, compared with 5.09 million in 2013.
Contracts to purchase previously owned homes rose more than forecast in July, a sign of renewed momentum in residential real estate.
The pending home sales index gained 3.3 percent after a 1.3 percent decrease in June that was larger than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for the index to advance 0.5 percent.
A pickup in hiring, rising property values and historically low interest rates are lifting home sales and prompting builders to break more ground. Faster wage growth and easier access to credit would give a bigger boost to the market.
“Housing is on a gradual glide path of improvement,” Gennadiy Goldberg, TD Securities USA LLC, said before the report. “If you had more wage growth people would be more inclined to buy homes.”
Estimates in the Bloomberg survey of 37 economists ranged from a decline of 0.5 percent to an advance of 3 percent.
The recovery is showing signs of gaining momentum, with jobless claims (INJCJC) near their lowest levels since 2007 and the economy expanding more rapidly than previously estimated. Gross domestic product grew at a 4.2 percent pace in the second quarter, the Commerce Department reported today in Washington. Claims for unemployment benefits dipped to 298,000 last week, Labor Department data showed.
For housing, purchase contracts fell 2.7 percent in the 12 months ending in July after a 4.7 percent annual decline in June that was bigger than previously estimated, today’s NAR report showed. July marked the 10th month of year-over-year declines.
The pending sales index was 105.9 on a seasonally-adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.
Pending sales rose in three of four regions, up 6.2 percent in the Northeast, 4.2 percent in the South and 4 percent in the West. Purchase contracts fell 0.4 percent in the Midwest.
“Steady job additions to the economy are helping family finances and giving them added confidence to enter the market,” NAR chief economist Lawrence Yun said in a statement.
Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.
Those re-sales picked up last month, increasing to a 5.15 million pace, the best showing since September, according to data from the National Association of Realtors. Construction also rebounded, with starts climbing 15.7 percent to a 1.09 million annualized rate.
At the same time, contracts on new homes fell unexpectedly in July to a 412,000 annualized pace, their weakest level since March, the Commerce Department reported earlier this week.
The slow progress is frustrating builders, lenders and real estate agents, many of whom thought 2014 might be a break-out year for the housing recovery. Agents are hampered by a low inventory of properties for sale and lending restrictions that have held back buyers, said Margaret Kelly, chief executive officer at Re/Max Holdings Inc., a national brokerage based in Denver.
“The biggest difficulty they have right now is obviously low inventory,” Kelly said on an Aug. 13 earnings call. “Despite the fact it’s starting to grow again, what we see within those inventory levels is there’s still a lot of homes that, I hate to say, are undesirable. And so when you take those out, it makes the inventory even tighter.”
The average rate for a 30-year, fixed mortgage was 4.10 percent in the week ended August 21, down from 4.53 percent at the start of the year, according to Freddie Mac in McLean, Virginia.
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WASHINGTON – A gauge of pending home sales rose 3.3% in July to reach the highest level in 11 months, signaling that upcoming closings of existing homes are likely to speed up, the National Association of Realtors reported Thursday. The index of pending home sales hit a seasonally adjusted 105.9 in July, compared with 102.5 in June. Low mortgage rates, moderating home-price growth and more homes for sale are all supporting deals, NAR said. However, weakness earlier in the year could drag 2014′s total sales of existing homes below last year’s tally. In July the pending-sales gauge was down 2.1% from a year earlier. By region, July’s gauge of pending home sales rose 6.2% in the Northeast, 4.2% in the South and 4% in the West. Meanwhile, the gauge declined 0.4% in the Midwest. Pending sales typically close within two months. An index reading of 100 equals 2001′s average contract activity level.
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WASHINGTON, DC–(Marketwired – Aug 28, 2014) – Pending home sales rebounded in July and have now risen in four of the last five months, according to the National Association of Realtors®. All major regions experienced healthy gains except for the Midwest, which saw a slight decline.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, climbed 3.3 percent to 105.9 in July from 102.5 in June, but is still 2.1 percent below July 2013 (108.2). The index is at its highest level since August 2013 (107.1) and is above 100 — considered an average level of contract activity — for the third consecutive month.
Lawrence Yun, NAR chief economist, says favorable housing conditions are behind July’s higher contract activity. “Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 20121,” he said. “The increase in the number of new and existing homes for sale is creating less competition and is giving prospective buyers more time to review their options before submitting an offer.”
Yun adds, “More importantly, steady job additions to the economy are helping family finances and giving them added confidence to enter the market.”
The PHSI in the Northeast jumped 6.2 percent to 89.2 in July, and is 8.3 percent above a year ago. In the Midwest the index marginally fell 0.4 percent to 104.6 in July, and is 6.4 percent below July 2013.
Pending home sales in the South increased 4.2 percent to an index of 119.0 in July, and is now 1.0 percent below a year ago. The index in the West rose 4.0 percent in July to 99.5, but remains 6.0 percent below July 2013.
Yun expects existing-homes sales to be down 2.1 percent this year to 4.98 million, compared to 5.09 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and 4 and 5 percent next year.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
1Total housing inventory in July 2014 was 2.37 million existing-homes available for sale, the highest since August 2012 (2.40 million).
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: Existing-home sales for August will be reported September 22, and the next Pending Home Sales Index will be September 29; release times are 10:00 a.m. EDT.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.
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U.S. home buyers signed more contracts to buy existing homes in July, rebounding from a drop in June. The National Association of Realtors’ monthly “pending home sales” index rose 3.3 percent but is still 2.1 percent below its level in July 2013. “Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012,” said Lawrence Yun, NAR’s chief economist. “The increase in the number of new and existing homes for sale is creating less competition and is giving prospective buyers more time to review their options before submitting an offer.” Regionally, pending home sales in the Northeast jumped 6.2 percent in July from June, and are 8.3 percent above a year ago. In the Midwest, sales fell 0.4 percent from June and are 6.4 percent below July 2013. The South rose 4.2 percent month-to-month and fell 1 percent for the year. Sales in the West rose 4.0 percent from June, but remain 6.0 percent below July 2013. Mortgage rates have not moved much this summer, although they are hovering near the lows of the year.
- Housing Market Cooldown: Home Prices Increasing at Slower Rate
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- What Housing Slump? Existing Homes are Flying off the Lots
- Diana Olick, CNBC.com
(The Day Ahead is an email and PDF publication that includes the day’s major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) The U.S. Commerce Department is due to release a first revision of second-quarter gross domestic product figures. Previous figures showed the U.S. economy rebounding strongly in the second quarter, after a dismal first three months of the year. But the Commerce Department is likely to slash its projections down to 3.9 percent in its first revision of second-quarter estimates, down from a previously reported 4 percent growth (0830/1230). Also expected is the National Association of Realtors’ pending home sales index, which is likely to show that contracts to buy previously owned homes rose in July (0830/1230). Weekly jobless claims data from the Labor Department is also on the radar (0830/1230).
Discount retailer Dollar General, in the midst of a bidding war for smaller rival Family Dollar, had said in June that it expects gross margins to improve in the second half of the year as it focuses on more profitable products such as accessories and stationery items. The company has been struggling to shore up margins after it slashed prices to keep its lower-income shopper base from being lured by retail giants Wal-Mart Stores and Target. When the company releases second-quarter results, analysts and investors will be looking out for comments on the its next move following Family Dollar’s rejection of its $8.95 billion bid, in favor of Dollar Tree’s smaller offer, citing antitrust concerns.
Avago Technologies is likely to report better-than-expected third-quarter revenue, according to Thomson Reuters StarMine data, helped by higher demand for its radio frequency chips used in smartphones. Analysts expect the company to benefit from the deployment of Long Term Evolution. The company’s wireless business is likely to be boosted by the launch of Apple’s next iPhone in September.
State-run Chinese offshore oil and gas producer CNOOC is expected to post a sharp fall in its first-half earnings as costs surged and production growth continued to sputter. CNOOC’S management will hold a media briefing at 1800 Hong Kong time. Investors will look for comments on cost cutting, production targets and anything related to the South China Sea.
Oil and gas producer PetroChina Co Ltd, which also owns refineries, is expected to post a slight increase in second-quarter profit, thanks in part to higher oil and gas prices and an improvement in refining margins. Investors expect the management to provide updates on the progress of the company’s pipeline assets divestment and overseas transactions.
Toronto-Dominion Bank and CIBC are scheduled to report their third-quarter results. Canada’s second- and fifth-largest lenders are both expected to report higher revenues and strong profits on the back of growing loan volumes and buoyant capital markets. But investors will watch for executive comments on slowing loan growth, the sustainability of profits from the banks’ investment banking arms and on a domestic housing market, which many fear is due for a downturn.
Abercrombie Fitch is likely to report a second-quarter profit above analysts’ expectations, according to StarMine. Analysts expect demand and gross margin to have remained weak in the quarter as the company clears excess inventories through discounting and tries to woo back customers by expanding its merchandise. Investors will watch for commentary on the second half of the year, when the company hikes investment in e-commerce and implements a cost-cutting plan that includes store closures to boost results.
The Alpbach economic conference in Vienna continues with speakers for the day including European Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor, Polish National Bank Governor Marek Belka and Bank of Finland Governor Erkki Liikanen.
Data on Canada’s current account will be watched, with economists forecasting that the deficit will continue to narrow in the second quarter. The report will be parsed for what it shows about the performance of the country’s export sector, which the central bank is hoping will become a bigger driver of growth (0830/1230).
Tayyip Erdogan will cement his position as modern Turkey’s most powerful leader when he is sworn in as head of state, taking him a step closer to the presidential system he covets, but heralding what opponents fear will be an increasingly authoritarian rule. Erdogan swears his oath in parliament at 1100 GMT followed by a ceremony in the early evening at the presidential palace, expected to be attended by representatives from around 75 countries.
(Compiled by Ayesha Sruti Ahmed in Bangalore; Editing by Simon Jennings)
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Homebuilder must-know: July 2014′s starts, sales, and prices (Part 3 of 5)
Existing home sales increase to 5.15 million in July
The National Association of Realtors (or NAR) reports existing home sales once a month. The seasonally adjusted number reports completed transactions in single-family homes, condominiums, townhomes, and co-ops. The report includes such data points as existing home sales, inventory of houses for sale, median house price, mortgage rates, and median time on the market.
Existing home sales were an annualized 5.15 million in July.
Restricted supply has been the theme of the U.S. housing market over the past year
At the end of July, there were 2.37 million existing homes for sale. This represented a 5.5-month supply. This is higher than the 2.24 million homes for sale last year. A level of six to 6.5 months means a balanced market. So, while inventory is building, we’re still at tight levels.
As professional investors have become major players in the real estate market, we’re seeing bidding wars for properties in the hardest-hit markets, like Phoenix, and even strong markets, like Washington, DC. For all the fears that a flood of properties would hit the market and drive down prices, the opposite problem has happened. That said, NAR forecasts that the jump in rates will begin to affect affordability in high-cost areas like California and the New York City metropolitan area.
Prices continue to rise
The median sale price for an existing home was $222,900. This is up 4.9% year-over-year. There’s definitely more demand than supply in the market. Some hot markets, like San Francisco and Phoenix, are experiencing the bidding wars we used to see in 2006.
This increase in median home prices is somewhat overstated. Most of the transactions are concentrated in a few areas. Nationwide, we’re not seeing such large increases in prices.
Homebuilder earnings were generally strong
Second quarter earnings for the builders are pretty much over. Last quarter, the builders with more exposure to the first-time homebuyer—like KB Home (KBH), PulteGroup (PHM), and D.R. Horton (DHI)—noted decreases in traffic as buyers became more price-conscious. We’ll hear soon from luxury builder Toll Brothers (TOL), which is the last builder to report.
Investors who want exposure to the entire homebuilding sector should look at the SP SPDR Homebuilder ETF (XHB).
Browse this series on Market Realist:
- Part 1 – A critical predictor: Housing starts rise back above 1 million
- Part 2 – Why building permits are nearing post-recession highs
- Part 4 – Why home prices are within 13% of their August 2006 peak
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