Existing-Home Sales Stumble in February – PR Newswire

WASHINGTON, March 22, 2017 /PRNewswire/ — After starting the year at the fastest pace in almost a decade, existing-home sales slid in February but remained above year ago levels both nationally and in all major regions, according to the National Association of Realtors®.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, retreated 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January. Despite last month’s decline, February’s sales pace is still 5.4 percent above a year ago.


February 2017 Housing Snapshot

February 2017 Housing Snapshot


Lawrence Yun is chief economist and senior vice president of research at the National Association of Realtors(r). Yun oversees and is responsible for a wide range of research activity for the association including NAR's Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1 million Realtor(r) members. (PRNewsFoto/National Association of Realtors) (PRNewsFoto/National Association of Realtors)

Lawrence Yun is chief economist and senior vice president of research at the National Association of Realtors(r). Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1 million Realtor(r) members. (PRNewsFoto/National Association of Realtors) (PRNewsFoto/National Association…


Lawrence Yun, NAR chief economist, says closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”

Added Yun, “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”

The median existing-home price2 for all housing types in February was $228,400, up 7.7 percent from February 2016 ($212,100). February’s price increase was the fastest since last January (8.1 percent) and marks the 60th consecutive month of year-over-year gains.

Total housing inventory3 at the end of February increased 4.2 percent to 1.75 million existing homes available for sale, but is still 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).

All-cash sales were 27 percent of transactions in February (matching the highest since November 2015), up from 23 percent in January and 25 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in February, up from 15 percent in January but down from 18 percent a year ago. Seventy-one percent of investors paid in cash in February (matching highest since April 2015).

First-time buyers were 32 percent of sales in February, which is down from 33 percent in January but up from 30 percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellersreleased in late 20164 – revealed that the annual share of first-time buyers was 35 percent.

“The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” said Yun. “Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched up in February to 4.17 percent from 4.15 percent in January. The average commitment rate for all of 2016 was 3.65 percent.

Properties typically stayed on the market for 45 days in February, down from 50 days in January and considerably more than a year ago (59 days). Short sales were on the market the longest at a median of 214 days in February, while foreclosures sold in 49 days and non-distressed homes took 45 days. Forty-two percent of homes sold in February were on the market for less than a month.

Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in February were San JoseSunnyvaleSanta Clara, Calif., 23 days; San FranciscoOaklandHayward, Calif., 27 days; VallejoFairfield, Calif., 33 days; SeattleTacomaBellevue, Wash., 36 days; and Boulder, Colo., at 37 days.

NAR President William E. Brown, a Realtor® from Alamo, California, says being fully prepared is the right strategy for prospective buyers this spring. “Seek a preapproval from a lender, know what your budget is and begin discussions with a Realtor® early on about your housing wants and needs,” he said. “Homes in many areas are selling faster than they were last spring. A buyer’s idea of a dream home in a popular neighborhood is probably the same as many others. That’s why they’ll likely have to decide quickly if they see something they like and can afford.”  

Distressed sales5 – foreclosures and short sales – were 7 percent of sales for the third straight month in February, and are down from 10 percent a year ago. Six percent of February sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in February (14 percent in January), while short sales were discounted 17 percent (10 percent in January).

Single-family and Condo/Co-op Sales

Single-family home sales declined 3.0 percent to a seasonally adjusted annual rate of 4.89 million in February from 5.04 million in January, and are now 5.8 percent above the 4.62 million pace a year ago. The median existing single-family home price was $229,900 in February, up 7.6 percent from February 2016.

Existing condominium and co-op sales descended 9.2 percent to a seasonally adjusted annual rate of 590,000 units in February, but are still 1.7 percent higher than a year ago. The median existing condo price was $216,100 in February, which is 8.2 percent above a year ago.

Regional Breakdown

February existing-home sales in the Northeast slumped 13.8 percent to an annual rate of 690,000, but are still 1.5 percent above a year ago. The median price in the Northeast was $250,200, which is 4.1 percent above February 2016.

In the Midwest, existing-home sales fell 7.0 percent to an annual rate of 1.20 million in February, but are still 2.6 percent above a year ago. The median price in the Midwest was $171,700, up 6.1 percent from a year ago.

Existing-home sales in the South in January rose 1.3 percent to an annual rate of 2.34 million, and are now 5.9 percent above February 2016. The median price in the South was $205,300, up 9.6 percent from a year ago.

Existing-home sales in the West decreased 3.1 percent to an annual rate of 1.25 million in February, but are 9.6 percent above a year ago. The median price in the West was $339,900, up 9.6 percent from February 2016.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.              

1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.


The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.


Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos. 


2
The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.


The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.


3
Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).


4
Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors®Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.


5
Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: NAR’s Pending Home Sales Index for February is scheduled for release on March 29, and Existing-Home Sales for March will be released April 21; release times are 10:00 a.m. ET.

Information about NAR is available at www.nar.realtor. 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.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/existing-home-sales-stumble-in-february-300427715.html

SOURCE National Association of Realtors

Related Links

http://www.realtor.org

Powell appointed to REIN board

John Powell, managing broker at Long Foster Real Estate’s Shore Drive-Coastal office, has been appointed to serve on the Real Estate Information Network’s 2017 board of directors for a two-year term.

Powell became a member of the REIN MLS when he was appointed as managing broker of Long Foster’s Shore Drive-Coastal office in Virginia Beach and the Virginia Eastern Shore offices in 2014, according to a news release.

He has served on the board for the Virginia Association of Realtors and the National Association of Realtors and previously served as president of the Virginia Association of Realtors in 2009.

Powell began participating in numerous Realtor associations and multiple listing service organizations when he started his real estate career in Richmond in 1986, according to a news release.

This is what’s behind the severe housing drought

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A couple are shown a property for sale in Newport Beach, California.

The supply of homes for sale is now at the lowest level since the National Association of Realtors began tracking inventory 18 years ago.

While all real estate is local, the problem is national. From coast to coast, buyers shopping in this spring market are finding less and less. What is listed is going fast — and selling at a premium.

In Southern California, home sales in February were 14 percent lower than the average for the month going back 30 years, according to CoreLogic. There are plenty of potential buyers out shopping, but they simply can’t afford what they find.

“Activity continues to be constrained by the decline in affordability and the relatively thin inventory of homes for sale,” said Andrew LePage, research analyst at CoreLogic. “San Bernardino County, which has the region’s lowest median sale price and entices many first-time buyers and others priced out of coastal markets, was the only Southern California county to post a year-over-year increase in sales this February.”

Housing starts are still only about 75 percent of their historical average, and what the builders are putting up is in the pricier, move-up category. The biggest problem is starter homes — the severe lack of them. Builders say their costs for land, labor and materials are too high right now, and starter homes squeeze their margins.

The median price of a newly built home did fall 5 percent in February, according to the U.S. Census, which could be a good sign or a monthly aberration.

“It’s hard to understate how important it will be for builders to continue adding new inventory to the market, especially in the low- and mid-priced segments where so much of the current home buyer demand lies,” said Svenja Gudell, chief economist at Zillow, who applauded the February price drop.

“But a few months of good progress won’t meaningfully change the dynamics of this year’s home shopping season — inventory is tight, competition will be fierce, and buyers need to be prepared to weather some frustration and show a lot of patience.”

But builders aren’t the whole crux of the problem. During the housing crash, investors purchased about 4 million distressed properties, the vast majority of them low-priced, starter homes. The expectation was that they would wait until home prices recovered and then sell them back out into the market. That has not happened, despite home prices exceeding their previous peak in some markets.

“Investors came in to get that cash flow, and the cash flow remains very positive,” said Lawrence Yun, chief economist at the National Association of Realtors. “The price appreciation is just extra gravy that they’re witnessing, and they’re saying they’re going to ride out this price increase.”

Strong price appreciation may also be adding to the lack of supply of homes for sale. On average, the more a local market has recovered, the larger the drop in inventory it’s seen, according to a new survey by Trulia.

“If you have a lot of equity in your home, that could be great to use to buy another one, but if that other home you might buy is that much more expensive than it was last year, you may stay put and you may renovate instead,” said Ralph McLaughlin, chief economist at Trulia.

In fact the remodeling industry has already seen big gains in the past year and expects more. Not only are homeowners doing more projects, they’re doing more expensive projects because now they have the home equity to afford them.

“During the economic downturn people were just doing the necessary maintenance on their home, and they weren’t doing a lot of discretionary or lifestyle improvements. Now we’re starting to see those discretionary and lifestyle improvements happen,” said Brad Hunter, chief economist at HomeAdvisor, a remodeling website. “People are going for their dream home more than before.”

That may bode well for home improvement retailers, but it does nothing to ease the supply shortage for potential homebuyers.

Diana Olick

Tight housing market hits entry-level buyers the hardest, analysis finds

Getty Images

A real estate agent hands out information on a home for sale during an open house in San Francisco, California.

The housing market is starved of starter and trade-up homes, making affordability more difficult, according to an analysis out Wednesday.

The National Association of Realtors on Wednesday said it would take 3.8 months to exhaust the available inventory of existing homes, the lowest level for any February on record. Existing-home sales fell 3.7% in February.

Read: Existing-home sales tumble as tight inventory chokes housing market

Data from real estate web site Trulia offers more details on the Realtors’ numbers.

Inventory of starter homes – those in the lowest third of median pricing in the market – fell nearly 9% from the first quarter of 2016 to the first quarter of 2017. Trulia took a weighted national average of incomes across the 100 biggest metros and matched the median income in each third, assuming that earners in the bottom third of the income distribution would buy homes in the bottom third of the market, and so on.

That analysis found that would-be buyers in the lowest segment would now need to spend 38.3% of their income to buy a home, while a buyer in the middle segment looking to buy a “trade-up” home, who would need to dedicate 25.6% of income to a home.

“The persistent and disproportional drop in starter and trade-up home inventory is pushing affordability further out of reach of homebuyers,” Trulia researchers wrote.

Buying a home in 2017? Prepare for battle – CBS News

If you’re thinking about buying a home this year, arm yourself with cash — and gird for an aggressive, nasty and stressful battle in many markets. You may also need to up the price you’ll actually pay well beyond your planned budget, according to a survey by website Owners.com.

“Home buying is about substantive economics, but it’s also got an element of ‘animal spirits,’” said its President Steve Udelson. “In some of the hottest markets, we’ve seen a double-digit run-up in prices.”

The website surveyed 1,289 prospective buyers nationwide, and its findings suggested that most prospective homeowners already had their feet in the starting blocks for the spring selling season. More than half were willing to go beyond their budget — by an average of nearly $38,000 — to get the property they desired.

And like most competitive athletes, they were hopeful as well as scared. Not surprisingly, about 60 percent of those surveyed feared:

  • Bidding wars driving up the price of their dream home
  • Losing the “earnest money” they put down when they signed a contract
  • Becoming “house poor,” that is, unable to afford amenities like a meal out in order to make the mortgage payment

Even though the survey was done by an online real estate broker, the National Association of Realtors (NAR) probably wouldn’t disagree. The NAR’s most recent survey of “days on market” shows that the time it takes to sell a house has fallen by 28 percent, from 69 days in January 2015 to 50 days in January 2017, the last month figures were available (see following chart). Since the real estate market is seasonal, and usually improves in spring and summer, a comparison by month offers the best analysis.

market-days.png

The NAR chart indicates that the days on market figure could drop to the low 30 percent level by midyear, as it did in 2016. In other words, the average home for sale across the country will be on the market for about a month or less, depending on location. That encourages buyers to put down a bid right away — or lose it.

The housing bubble, seen during the early years of this century, burst in 2007 and 2008, leaving a huge glut of homes on the market, along with a large number of foreclosures. But that has changed, and the market has seen a steady run-up of home prices in recent years, while builders of new homes haven’t kept up.  

NAR Chief Economist Lawrence Yun said the rising prices for housing is simple: lack of supply. “There’s not enough inventory out there to satisfy people,” he said. “Buyer traffic is clearly outpacing seller traffic [see following chart]. That’s because there’s been an underproduction of new homes over the past decade.”

Yun expects prices to rise 4 percent in 2017, roughly the same as last year. The reason he doesn’t expect a huge spike — at least right now — is that a gradual increase in mortgage rates due to Federal Reserve interest rate hikes will “put a damper on it.” Plus, the housing market has already seen a significant price rise.

buyer-seller-traffic.png

Bicoastal prices, which are always tight, are on the rise, but even in the middle of the country, cities like Kansas City and St. Louis, Missouri, are also surging. The only declines on the horizon are in states such as Alaska, Louisiana and North Dakota, where job losses in the oil market have caused housing prices to fall.

Also, most of the homes for sale in New England aren’t seeing multiple bids, with the exception of Boston, which is still a hot market, Yun said.

Udelson, who said the “hot market” cuts both ways, sounded a warning bell for what might happen in the future. In particular, he pointed to overextended areas of both coasts where only 30 percent to 40 percent of the prospective home buyers had the median income that could finance the mortgage for an average-price home.

“The wider spreads in prices are being set by the marginal buyers,” said Udelson, meaning that those who are able to buy move the prices up, and everyone else tries to follow along. 

Auctions are becoming more of the norm, where the home ends up selling for far more than the listing price because prospective buyers bid it up. “You may be involved in one and not even know it,” he warned. “It reminds me of what we’ve seen in past run-ups where prices weren’t fully supported by values.”

The Owners.com survey concluded that nearly three-quarters of all potential buyers expect “stress in the home buying process.” That comes as no surprise.

US home sales slowed in February after surge in January

  • In this Monday, Feb. 27, 2017, photo, real estate signs mark the lots near one of the new homes for sale in a development for new homes in Cranberry Township, Butler County, Pa. Americans retreated from buying existing homes in February, a pullback after sales in January had surged to the fastest pace in a decade, according to information released Wednesday, March 22, 2017, by the National Association of Realtors. Over the past 12 months, sales are up solidly. Photo: Keith Srakocic, AP / Copyright 2017 The Associated Press. All rights reserved.

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In this Monday, Feb. 27, 2017, photo, real estate signs mark the lots near one of the new homes for sale in a development for new homes in Cranberry Township, Butler County, Pa. Americans retreated from buying existing homes in February, a pullback after sales in January had surged to the fastest pace in a decade, according to information released Wednesday, March 22, 2017, by the National Association of Realtors. Over the past 12 months, sales are up solidly. less


Photo: Keith Srakocic, AP


WASHINGTON (AP) — Americans retreated from buying existing homes in February, a pullback after sales in January had surged to the fastest pace in a decade. But over the past 12 months, sales are up solidly.

Sales of existing homes fell 3.7 percent last month to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Wednesday. The decline may represent just a temporary slump after the sharp sales increase in January.


Stable hiring and a recovering economy have fueled greater demand among homebuyers. Over the past year, purchases have risen 5.4 percent. At the same time, sales growth has been restricted by a shortage of homes on the market.

“The underlying story is still very positive for the housing market,” said Jennifer Lee, a senior economist at BMO Capital Markets. “The February drop is just a blip in the overall trend.”

The limited inventory and risks of rising mortgage rates may actually cause the spring home-buying season to begin with a sprint this month. Unlike last year when average 30-year mortgage rates held below 4 percent, buyers may this year feel forced to act swiftly before even higher loan rates and prices make home ownership less affordable.

The number of listings for sale has tumbled 6.4 percent over the past year to 1.75 million homes, a figure only slightly higher than in January when listings declined to the lowest level since the Realtors began tracking the data in 1999.

The supply of homes for sale has fallen on an annual basis for the past 21 months. With inventories squeezed, home values have been rising at levels that are putting greater financial pressure on would-be buyers.

The median sales price has risen 7.7 percent from a year ago to $228,400, more than double the pace of average wage gains.

Lower mortgage rates had eased some of that pressure last year. But the average 30-year fixed rate mortgage carried an interest rate of 4.3 percent last week, up from an average of 3.65 percent last year, according to mortgage buyer Freddie Mac.

In February, sales of existing homes slumped in the Northeast, Midwest and West, while the South eked out a slight gain.

NAGLREP Calls on NAR to Join Support for LGBT-Focused Bills …

The National Association of Gay and Lesbian Real Estate Professionals (NAGLREP) is calling on the National Association of REALTORS® (NAR) to join support for two bills that would positively impact the LGBT community, sending letters to NAR CEO Dale Stinton, NAR President Bill Brown and members of the NAR leadership team, the organization recently announced.

One bill, submitted by Scott Taylor (R-VA), would “extend protections of the Fair Housing Act to persons suffering discrimination on the basis of sexual orientation and gender identity.” The other, submitted by David Cicilline (D-RI), co-chair of the Congressional LGBT Equality Caucus, would reintroduce the Equality Act, prohibiting discrimination against the LGBT community in credit, education, employment, federal funding, housing, jury service and public accommodations. Both addressed the bills at the first NAGLREP Housing Policy Summit in March.

“It was a monumental day in the 10-year history of NAGLREP to have such critical discussions with two esteemed members of Congress,” says John Graff, chair of the NAGLREP Policy Committee and REALTOR® with the John Graff Group in Los Angeles. “Both Mr. Cicilline and Mr. Taylor explained they are working on their bills because they are fair and the right thing to do. NAGLREP fully expects NAR to join us in fully supporting both bills and join us in working to eliminate any and all housing discrimination.”

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“NAGLREP has an important role to work with such distinguished members of Congress, and we recognize we are living in uncertain times and were reminded during the Summit how important it is for all us to share our views with our national and state leaders,” says Jeff Berger, founder of NAGLREP. “While not everyone aspires to be an advocate, it is critical that all of us in the real estate community do what we can to eliminate housing discrimination against anyone.”

NAGLREP is encouraging REALTORS® to contact their state representative in support of the bills here.

For more information, please visit www.naglrep.com.

For the latest real estate news and trends, bookmark RISMedia.com.

Can housing keep chugging despite headwinds?

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Five Boise Regional Realtors members inducted into NAR Emeritus Society

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Holding An Open House

If you’re looking to sell your house, you may find yourself inquiring on the value of holding your house open while it’s on the market.

You’d be right to wonder if it’s worth the time and trouble, as according to the National Association of Realtors, less than 1 percent of homes are sold through open house.

With these odds, is it worth the bother to ensure that your house is spotless and ready to show, vacate the house for a couple of hours, and be set up for disappointment if there’s no offer when you return?

Despite the mixed emotions, when reviewing the many marketing options to sell your house, here’s why you should consider keeping “open house” on the list of things to do.