WASHINGTON (Reuters) – Contracts to purchase previously owned U.S. homes fell more than expected in August, pointing to a still shaky housing sector.
The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.0 percent to 104.7. Economists polled by Reuters had expected a decline of just 0.1 percent.
Despite the drop, pending sales were still at the second-highest level of the year. In July, sales had risen 3.2 percent, a touch softer than the previously reported 3.3 percent gain.
The index plunged last year after mortgage interest rates spiked, but have been on a rising trend since this past March.
Contracts signed last month declined in all major regions, except in the West, where they rose for a fourth straight month, the NAR said.
(Reporting by Elvina Nawaguna; Editing by Andrea Ricci)
- Real Estate
News Corp and Move, Inc. announced today that News Corp has agreed to acquire leading online real estate business Move. Move has an exclusive, strategic relationship with the National Association of REALTORS® (NAR) and NAR has given its consent to the acquisition.
According to a release by News Corp, REA Group Limited (“REA”), which is 61.6 percent owned by News Corp and is the operator of the leading Australian residential property website, realestate.com.au, plans to hold a 20 percent stake in Move with 80 percent held by News Corp.
Under the acquisition agreement, which has been unanimously approved by the board of directors of Move, News Corp will acquire all the outstanding shares of Move for $21 per share, or approximately $950 million (net of Move’s existing cash balance), via an all-cash tender offer. This represents a premium of 37 percent over Move’s closing stock price on September 29, 2014. REA’s share will be acquired for approximately US$200 million. News Corp intends to commence a tender offer for all of the shares of common stock of Move within 10 business days, followed by a merger to acquire any untendered shares.
“This acquisition will accelerate News Corp’s digital and global expansion and contribute to the transformation of our company, making online real estate a powerful pillar of our portfolio,” said Robert Thomson, chief executive of News Corp. “We intend to use our media platforms and compelling content to turbo-charge traffic growth and create the most successful real estate website in the U.S. We are building on our existing real estate expertise and expect to leverage the potential of Move and its valuable connections with REALTORS® and consumers around the country.”
“In addition to boosting Move’s subscription, advertising and software services, this acquisition will give News Corp a significant marketing platform for our media assets, which will benefit from the high-quality geographic data generated by real estate searches,” said Thomson. “We certainly expect this deal to amount to far more than the sum of the parts.”
“News Corp’s acquisition of Move speaks powerfully to the quality and value of our content, audience and industry relationships,” said Steve Berkowitz, CEO of Move. “We provide people with the information, tools and professional expertise they need to make the best and most informed real estate decisions, and we work to uphold the indispensable role of the professional in the real estate experience. News Corp shares our vision, which is one of the many reasons this combination is such good news for our customers, consumers and the industry as a whole.”
“This partnership will help shape the future of real estate,” said National Association of REALTORS® President Steve Brown. “News Corp’s ability to reach and engage consumers, combined with realtor.com®’s quality content and the real insights REALTORS® provide will transform the current landscape. Working together, REALTORS®, Move and News Corp will truly make home happen.”
Move owns ListHub, a digital platform that aggregates and syndicates MLS data to more than 130 online publishers, reaching approximately 900 websites.
Stay tuned to RISMedia.com for further developments on this story.
We’ve long heard that the housing market recovery suffers from a shortage of first-time buyers, and that the long-term outlook for housing largely hinges on their return.
This view was backed by economists who participated in a panel on Monday at the National Association for Business Economics annual meeting, held in Chicago. But panelist Ivy Zelman suggested that first-timers may be starting to come back.
For one, first-time buyers made up 52% of those who purchased a home with a mortgage in the third quarter of this year, said the chief executive of real-estate research company Zelman Associates, citing combined statistics from Fannie Mae, Freddie Mac and Ginnie Mae.
It’ s important to note the percentage of first-time buyers looks less impressive when all home sales are considered, since that also accounts for cash sales. In August 2014, only 29% of all buyers of existing homes were first-timers, according to National Association of Realtors data. For comparison, between October 2008 and October 2010, an average 41% of all buyers of existing homes were first-timers, David Crowe, chief economist for the National Association of Home Builders, pointed out during the panel discussion.
Still, the purchase activity of home buyers younger than 30 who bought with a mortgage (with the intent to live in the home) rose 8%, year over year, in 2012, according to a Zelman Associates analysis. Purchase activity for this group rose 10%, year over year, in 2013. And purchase activity rose 19%, year over year, in both 2012 and 2013 for those between the ages of 30 and 39.
What’s more, lenders are slowly loosening their lending standards, allowing more first-timers with lower down payments and credit scores to obtain financing, Zelman argued.
“After refis plummeted [due to an uptick in mortgage rates], there was a void and a capacity that mortgage companies wanted to fill,” Zelman said. But many people don’t realize that it’s getting a little easier to obtain a mortgage. “As far as they’re concerned, the mortgage market is closed. But the narrative is starting to change.”
In the coming years, as the youngest millennials turn 30, there should also be more demand for single-family housing, she said. While it’s true that people are delaying marriage and kids — and thus many times also delaying the purchase of their first single-family home — they won’t delay forever. Most mothers will have a desire to own a home with a yard for their growing families, Zelman said.
Effect on home building
An increase in first-time buyers can’t come quickly enough for the home building industry.
Throughout the 1990s and up until about 2005, new homes made up 16% of total sales, Crowe said. By comparison, in 2013, new home sales made up 8.8% of all sales. Move-up buyers are often able to buy a new home when a first-time buyer purchases their starter home, he explained.
Moreover, today’s first-time buyers are more likely to buy homes that are vacant due to foreclosure, he said. Because the former owners have left already, the sale doesn’t trigger another sale.
According to the National Association of Realtors (NAR), pending home sales slowed in August 2014, but contract signings remain at their second-highest level over the past year. All major regions experienced declines except for the West, which rose for the fourth consecutive month.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 1.0 percent to 104.7 in August from 105.8 in July, and is now 2.2 percent below August 2013 (107.1). Despite the slight decline, the index is above 100 – considered an average level of contract activity – for the fourth consecutive month and is at the second-highest level since last August.
Lawrence Yun, NAR chief economist, says contract signings are holding steady and fewer distressed sales and less investor activity is likely behind August’s modest decline. “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” he said. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
According to NAR’s Profile of Home Buyers and Sellers, 81 percent of first-time buyers in 2013 who financed their purchase obtained a conventional or FHA loan. Overall, first-time homebuyers have been less prevalent from the housing recovery, representing less than a third of all buyers each month for the past two years.
Yun says first-time buyer participation should gradually improve despite tight credit conditions and the inevitable rise in rates. “The employment outlook for young adults is brightening and their incomes3 finally appear to be rising,” he said. “Jobs and income gains will help repay student debt and better position first-time buyers, setting the stage for improved sales growth in upcoming years.”
The PHSI in the Northeast slipped 3.0 percent to 86.5 in August, but is still 1.6 percent above a year ago. In the Midwest the index fell 2.1 percent to 102.4 in August, and is 7.6 percent below August 2013.
Pending home sales in the South decreased 1.4 percent to an index of 117.0 in August, unchanged from a year ago. The index in the West rose for the fourth consecutive month (2.6 percent) in August to 102.1, but still remains 2.6 percent below August 2013.
Existing-home sales are expected to be stronger in the second half of the year behind improved inventory conditions, continuously low interest rates and slower price growth. Overall, Yun forecasts existing-homes sales to be down 3.0 percent this year to 4.94 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.
According to the National Association of Realtors (NAR), pending home sales slowed in August 2014, but contract signings remain at their second-highest level over the past year.
According to RealtyTrac’s August 2014 U.S Residential Foreclosure Sales Report, U.S. residential properties, including single family homes, condominiums and townhomes, sold at an estimated annual pace of 4,508,559 in August.
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 19, 2014, mortgage applications decreased 4.1 percent from one week earlier.
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes increased 18 percent in August to a seasonally adjusted annual rate of 504,000 units in August.
Like the start of the ‘Fall season’, there seems to be change in the air for Miami’s real estate market these days.
According to Florida Realtors, Florida’s housing market reported higher median prices and rising inventory in August 2014. Closed sales of single-family homes statewide totaled 21,594 last month, up 4.2 percent over the August 2013 figure.
Broadcast/Web Reporter- Washington Business Journal
It’s one step forward, one step back for the housing market: Pending home sales declined in August after improving in July, underscoring the unsettled nature of the residential real estate market.
The National Association of Realtors’ Pending Homes Sales Index, which is based on contracts signed for previously-owned homes, fell 1 percent in August from July and is 2.2 percent lower than August 2013, the industry trade group said Monday. Pending sales mirrored a drop in settled purchases of previously-owned homes during the month. Those settlements were of contracts signed earlier in the year.
The August pullback followed a 3 percent gain for pending home sales in July. July’s advance had improved on a 1 percent June decline after three months of gains for pending home sales in the spring home-buying months of March, April and May.
In once sense, August’s decline can be blamed on the market’s improvement since the Great Recession. “Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” NAR chief economist Lawrence Yun said in a statement. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
Those first-time buyers may face higher mortgage rates in coming months, but they aren’t out of reach just yet. Freddie Mac reported last week that a 30-year fixed-rate mortgage averaged 4.20 percent in the week ending Sept. 25, down from 4.23 percent the week before. A year ago, 30-year rates averaged 4.32 percent.
Tucker Echols covers general assignment and provides business coverage for WTOP.
The National Association of Realtors is giving its blessing to plans by publishing giant News Corp to acquire realtor.com operator Move Inc. because of the potential “multiplier effect” for realtor.com if owned by the “world’s pre-eminent media, publishing and digital real estate businesses.”
Under the terms of a 1996 realtor.com operating agreement between Move and NAR, NAR has the right to sever ties with Move in the event of a “change in control,” or if it was not represented in Move’s board of directors. If NAR terminates the agreement, the acquisition will not go forward, according to language built into the terms of the deal.
Wedding cake image via Shutterstock.
Instead, NAR will tender its own shares in Move, and give up its seat on Move’s board of directors. As of March 31, NAR held 1.92 percent of Move’s common stock and its only share of Series A preferred stock, according to a regulatory filing.
Move will continue to have “the exclusive and perpetual right to operate realtor.com,” News Corp Chief Executive Robert Thomson said in a conference call with investors.
NAR never considered standing in the way of the deal because the upside was “so phenomenal” for members, according to Bob Goldberg, president and CEO of the NAR subsidiary that oversees the agreement, Realtors Information Network (RIN).
“If we had not approved the acquisition, we’d still be working with Move anyway, so it wasn’t an issue of NAR taking [realtor.com] back,” he said.
“We need the thrust of a strong media player that can bring far more to the table than we’ve experienced before.”
The acquisition, Goldberg said, is a “huge win” for members because it will bring them and their homebuyer and seller clients more exposure to consumers visiting News Corp’s digital and print platforms, which include a variety of newspapers in the U.S., the United Kingdom and Australia.
In a memo to colleagues, Thomson said News Corp brings real estate experience gained through its 61.6 percent ownership stake in the REA Group, operator of Australian search portal realestate.com.au, and newspapers including The Wall Street Journal, which operates its own real estate portal, “Mansion.”
REA plans to become a 20 percent stakeholder in Move and “will be an important and extremely able partner as we rapidly build Move’s future,” Thomson said.
Move “has much going for it — its websites, including the popular realtor.com, convert more leads into sales than any other digital property business,” he said, adding that Move also benefits from its “significant ties” to NAR.
On this morning’s investor call, Thomson said NAR and its members were an important part of the real estate ecosystem.
“We see tangible and enduring value in the role of Realtors, who are pivotal in navigating the sale and the acquisition of real estate, whether it be in arranging inspections or in providing background intelligence that is essential for market participants,” he said.
“And we see a growing role for Move in the market. It has the right assets, the right relationships and, soon, the right platform to project it into the future.”
In contrast to Zillow’s proposed acquisition of Trulia, which Goldberg called “an additive play,” merging with News Corp will have a “multiplier effect” for realtor.com, Goldberg said.
“They’ll have eyeballs coming from many more new sources that were never available to us before,” he said.
In an FAQ to members, NAR drew a further comparison. “This is not a case of two online real estate sites merging. This is a robust, experienced digital real estate business with a long-standing and powerful connection with the million-plus member National Association of Realtors joining forces with one of the world’s pre-eminent media, publishing and digital real estate businesses.”
Goldberg declined to disclose any details about what kind of opportunities will be available to members on News Corp’s platforms, though he mentioned search widgets and advertising as possibilities. He also declined to disclose upcoming changes to the realtor.com site after the deal closes, citing competitive reasons.
As part of the deal, all members of Move’s eight-member board of directors have agreed to resign, including NAR’s current board representative Catherine Whatley. NAR will instead have two seats on the company’s nine-member advisory board.
“It will be a different type of approach because it’s advisory in nature, but items and issues that impact realtor.com will certainly be worked through and discussed with that advisory board,” Goldberg said.
The realtor.com operating agreement will be modified “a little bit” as a result of the deal, he said, but declined to disclose those changes. Still, he said the changes made to the agreement last year were more “substantial” and gave Move and realtor.com more flexibility to be more competitive, which helped make Move “more attractive” to companies like News Corp.
NAR and Realtors will still have a say in how realtor.com is run, Goldberg said, with its seats on the advisory board. RIN staff will also stay in place to take member feedback and work collaboratively with the operator. The operating agreement also continues to require NAR approval in regards to advertising changes.
“NAR and RIN are both extremely excited about what this can do on behalf of our members. We would never have gone down a path of supporting a major play like this unless we knew it had great potential for members and consumers,” Goldberg said.
In its FAQ, NAR outlined how News Corp intends to support Realtors on realtor.com:
- Listings received under a data content provider agreement will not be modified without permission of the broker or agent, as applicable.
- Consistent with past practice and subject to the broker’s or agent’s instructions, updating listings regularly to ensure that they are timely and accurate.
- Consistent with past practice and subject to the broker’s or agent’s instructions, respecting copyright notices and utilizing anti-scraping technologies and processes as reasonably appropriate.
- Except as otherwise permitted in the Operating Agreement, only displaying properties that are listed with the assistance of a licensed real estate broker or salesperson and not properties offered for sale directly by owner.
- Respecting Realtors livelihood by not interfering with their referral or commission structure and not attempting to disintermediate Realtors with the real estate transaction.
Fewer listings and an exodus of investors weakened home sales in August.
The number of signed contracts to buy existing homes fell 1 percent in August compared to July and is down 2.2 percent from August of 2013, according to the National Association of Realtors. Analysts had been expecting these so-called pending home sales, a future indicator of closed sales, to remain unchanged month-to-month. The Realtors’ pending home sales index is still, however, at its second highest level in the last year.
Read More 10 property hotspots to watch
“Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” said Lawrence Yun, chief economist for the Realtors. “With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
Regionally, pending home sales fell 3 percent month-to-month in the Northeast, fell 2.1 percent in the Midwest, were down 1.4 percent in the South and rose only in the West, up 2.6 percent from July.
While supplies of for-sale homes had been rising through the first half of this year, that trend appears to be turning; listings usually drop off in the fall and winter months, but the number of newly listed homes fell 9.3 percent from July to August, compared with an average drop of 3.2 percent between July and August over the past five years,” according to Redfin, a real estate brokerage.
Buyer demand, however, does not appear to be falling off. Redfin also found customer traffic up over 37 percent in August year-over-year.
“The seemingly incongruous August numbers reflect the mindsets of buyers and sellers,” noted Nela Richardson, Redfin’s chief economist. “Buyers want to buy, but they’re patient, and more careful not to overpay. At the same time, sellers are adjusting to having less power, which seems to have put a damper on some listing their homes.”
Home prices, while still rising on a national basis, are moderating from the big jumps seen last year. Prices rose 5.1 percent in July, year-over-year, according to a report released Monday by Black Knight Financial Services. The annual gains have been shrinking for several months. Home prices are still about 10 percent below their peak in 2006.
- Real Estate
By Josh Boak, The Associated Press
WASHINGTON – Fewer Americans signed contracts to buy homes in August, suggesting that real estate sales will remain sluggish over the next few months.
The National Association of Realtors said Monday that its seasonally adjusted pending home sales index fell 1 per cent over the past month to 104.7. Higher prices and weak wage growth has limited buying, as the index is 2.2 per cent below its level from a year ago.
The five-year recovery from the Great Recession has been uneven, such that historically low mortgage rates have failed to propel buying back to usual levels. Price increases going back to 2013 have led to fewer homebuyers, while many families have lacked the income to save for down payments. Investors making all-cash offers on homes have also begun to retreat, reducing the total number of sales.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
The Realtors project that 4.94 million existing homes will be sold this year, down 3 per cent from 5.09 million in 2013. Analysts generally associate sales of roughly 5.5 million existing homes with a healthy market.
August contracts fell in all four geographical regions — Northeast, Midwest, South and West — compared to the prior month. The index had registered overall gains in four of the previous five months.
Combined with homebuilders catering to higher-income buyers instead of the mass market, the contracts index points to trivial improvements in home sales in September.
“We hope this lost ground will be recovered gradually, but with investors disappearing from the market and homebuilders gaining market share from private sellers, it will take time,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The housing rebound started to struggle in the middle of 2013. Mortgage rates started to rise from historic lows, even though they remain below their historic averages. Fierce winter storms delayed construction and slowed foot traffic at open houses at the beginning of 2014. Sales, however, never quite showed much strength during the summer buying season because wage growth has been so modest coming out of the downturn.
Purchases of existing homes fell 1.8 per cent to a seasonally adjusted annual rate of 5.05 million in August, the Realtors said last week. Sales fell from a July rate of 5.14 million, a figure that was revised slightly downward.
New-home sales did show greater strength in August, but they continue to be below the 1990s pace of more than 700,000 sales a year.
Sales of new homes climbed 18 per cent last month to a seasonally adjusted annual rate of 504,000, although much of the gains were concentrated in the West. More importantly, 28 per cent of the new homes sold in August cost more than $400,000, compared to just 18 per cent a year earlier.
US pending home sales slowed a bit in August after July’s strong pace, the National Association of Realtors said Monday.
The pending home sales index dipped 1.0 percent to 104.7 in August, after reaching a revised 105.8 in July, the highest level since August 2013, NAR said.
The index, a forward-looking indicator based on contract signings, showed declines in all major regions except for the West, where pending home sales rose for the fourth straight month.
Contract signings in the West broke above the index’s 100 reading, considered an average level of activity, hitting 102.1.
“Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month,” said Lawrence Yun, NAR’s chief economist.
“With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.”
According to NAR’s latest outlook, the Fed’s first increase in the federal funds rate, pegged at zero to 0.25 percent since late 2008, will come in the second quarter next year.
The industry group projected the benchmark 30-year mortgage rate would rise in April-June quarter to 5.0 percent, from 4.2 percent in the current year.
August contract signings were down 2.2 percent from a year ago amid a slowing recovery in the housing market.
NAR said sales of existing homes, the largest segment of the market, would likely accelerate in the second half of the year due to improved inventory conditions, low interest rates and slower price growth.
Recent housing market data has been mixed. In August, existing-home sales fell 1.8 percent after four straight months of gains, a slowdown NAR attributed to a sharp exodus of investors who had been snapping up properties in all-cash deals.
However, new-home sales soared 18 percent in August to the fastest pace in more than six years, suggesting housing demand had stabilized in recent months.
- Real Estate
The woman’s body was found in the early hours of Tuesday.
The woman’s body was found in the early hours of Tuesday.