Thursday, June 28, 2012

NAR: Pending sales at two-year high


WASHINGTON – June 27, 2012 – Pending home sales bounced back in May, matching the highest level in the past two years and well above year-ago levels, according to the National Association of Realtors® (NAR). Every region saw monthly and annual gains.

NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April; and it’s 13.3 percent above May 2011 when it was 89.2. The data reflect contracts but not closings.

The index also reached 101.1 in March, which is the highest level since April 2010, though at that time, buyers were rushing to beat the deadline for the homebuyer tax credit.

“The housing market is clearly superior this year compared with the past four years,” said Lawrence Yun, NAR chief economist. “The latest increase in home contract signings marks 13 consecutive months of year-over-year gains. Actual closings for existing-home sales have been notably higher since the beginning of the year, and we’re on track to see a 9 to 10 percent improvement in total sales for 2012.”

The national median existing-home price is expected to rise 3.0 percent this year and another 5.7 percent in 2013.

The PHSI in the Northeast increased 4.8 percent to 82.9 in May and is 19.8 percent above May 2011. In the Midwest, the index rose 6.3 percent to 98.9 in May and is 22.1 percent higher than a year ago. Pending home sales in the South increased 1.1 percent to an index of 106.9 in May and are 11.9 percent above May 2011. In the West the index jumped 14.5 percent in May to 108.7 and is 4.8 percent stronger than a year ago.

Pending home sales could be even higher, but low inventory could be holding back sales in some areas – a relatively new challenge.

“If credit conditions returned to normal, and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” Yun said. “In an environment of historically favorable housing affordability conditions, it’s frustrating to see some consumers thwarted in the process.”

Low inventory results partly from underwater homeowners who are unwilling to list their homes, which would require a lengthy short sale process or additional cash to complete the transaction. NAR estimates 85 percent of homeowners have positive equity, with 15 percent underwater.

“Low inventory can be cured by increasing new home construction,” Yun says. He projects housing starts to rise by 26 percent this year and another 50 percent in 2013.

“If housing starts do not rise in a meaningful way over the next two years due to the difficulty in getting construction loans, and barring an unexpected shift in the economy, the steady shedding of inventory could lead to shortages where home prices could get bid up close to 10 percent in 2013,” Yun said.

Wednesday, June 27, 2012

Existing-Home Sales Constrained by Tight Supply in May, Prices Continue to Gain


WASHINGTON (June 21, 2012) - Limited supplies of housing inventory held back existing-home sales in May, but sales maintained a strong lead over year-ago levels and home prices are on a sustained uptrend in all 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, declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April, but are 9.6 percent above the 4.15 million-unit pace in May 2011.
Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. "The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring," he said. "Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier."
There are broad-based shortages of inventory in the lower price ranges in much of the country except the Northeast, and in the West supply is extremely tight in all price ranges except for the upper end. "Realtors® in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property," Yun added. Widespread inventory shortages also are found in much of Florida.
Total housing inventory at the end of May slipped 0.4 percent to 2.49 million existing homes available for sale, which represents a 6.6-month supply2 at the current sales pace; there was a 6.5-month supply in April. Listed inventory is 20.4 percent below a year ago when there was a 9.1-month supply. Unsold inventory has trended down from a record 4.04 million in July 2007; supplies reached a cyclical peak of 12.1 months in July 2010.
"The recovery is occurring despite excessively tight credit conditions and higher downpayment requirements, which are negating the impact of record high affordability conditions," Yun said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to a record low 3.80 percent in May from 3.91 percent in April; the rate was 4.64 percent in May 2011; recordkeeping began in 1971.

Home prices rise in nearly all major U.S. cities


WASHINGTON (AP) – June 26, 2012 – Home prices rose in nearly all major U.S. cities in April from March, further evidence that the housing market is slowly improving even while the job market slumps.

The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.

And a measure of national prices rose 1.3 percent in April from March, the first increase in seven months.

San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 percent in Detroit, the only city to record a drop.

The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.

Prices are increasing as other parts of the housing market are strengthening. Sales of new and previously occupied homes are up over the past year, in part because mortgage rates have plunged to the lowest levels on record. Builders are more confident and are starting to build more homes.

The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.

Its measure of home prices for all 20 cities fell 1.9 percent over the 12 months ending in April. That suggests weaker markets continue to weigh on national prices.

But other measures show home prices have risen nationally over the past year. CoreLogic, a private firm, calculates that prices rose 1.1 percent nationally in the 12 months ending in May. Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, says prices have increased 3 percent in the 12 months ending in April.

Recent data indicate that the housing market has started to recovery more than five years after the bubble burst.

Greater interest from buyers is boosting builders’ confidence. In May, builders requested the highest number of permits to build homes and apartments in three and a half years.

The supply of homes for sale remains extremely low, which has helped stabilized prices. The inventory of previously occupied homes is back down to levels last seen in 2006. And there were 145,000 new homes for sale in May. That’s only slightly higher than in April, which was the lowest supply on records dating back to 1963.

Despite the modest gains in housing, the broader economy has weakened in recent months. Employers have added an average of only 73,000 jobs a month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year. Some economists worry that the sluggish job market could weigh on home sales just as the housing market is flashing signs of recovery.

Monday, June 18, 2012

Inventory of unsold homes lowest in 5 years


SANTA ANA, Calif. – June 18, 2012 – CoreLogic’s monthly report on home sales, released last week, finds that the level of unsold inventory hit its lowest point in five years.

CoreLogic analysts say negative equity has become a positive force in the real estate marketing. Homeowners who owe more on the mortgage than the currently value of their home choose not to sell right now. That has increased selling prices by limiting the number of homes on the market.

Key findings include:

• The Home Price Index (HPI), including distressed sales, posted two consecutive months of year-over-year increases in April 2012 – the first such increase since the summer of 2010 when the housing market was benefitting from tax credits.

• Single-family construction activity increased 2.3 percent in April, and it’s up 25 percent over the last six months.

• Months’ supply of unsold homes fell to just more than six months in April 2012 and is currently at the lowest level in more than five years.

• As the flow of REOs has slowed over the last 18 months, negative equity has become a positive force in real estate markets by restricting supply in the face of increasing demand.

• The housing market has transitioned from pricing dynamics driven by economic weakness and high shares of distressed sales to one of restricted supply, which will likely exist for some time to come – a reason for optimism in many hard hit markets.

A complete copy of the June CoreLogic MarketPulse report is available online.

Homes no longer yours for a steal


WASHINGTON – June 18, 2012 – It’s not something that economists routinely track, but it provides a rough sense of what’s happening in local real estate markets. Call it the lowball index.

A year ago, according to researchers at the National Association of Realtors (NAR), one out of 10 members surveyed in a monthly poll complained about lowball offers on houses listed for sale. In the latest survey – conducted during March among a sample of 4,500 agents and brokers across the country and not yet released – there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels – fewer houses available to sell – and multiple offers on well-priced listings.

A lowball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25 percent or more below list. Lowballs increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities, and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by lowballing their offers are ending up at the back of the line – their contracts either rejected out of hand or countered close to the original asking price.

In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to lowballers. Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., says that multiple offers are “the rule, not the exception,” in her area, and many transactions end up with final contract prices higher than the listing. “Sure, I’ve had a few buyers try to lowball and they wouldn’t listen,” she said in an interview, “but that didn’t work out well for them.”

Similar trends are under way in more moderately priced markets. Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said “lowball offers are down a lot because we’re seeing more homes come on the market that are more realistically priced” – sellers have absorbed the hard lessons of the recession years about what the market can bear. Even when buyers submit shockingly low bids, sellers no longer are so insulted they send the contract back without a counter-offer. Now they negotiate aggressively and the final number ends up close to the original asking price.

For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. Though the seller was irritated, after a series of negotiations the lowball buyer settled for a final price of $230,000.

Outside Washington, D.C., in the Northern Virginia suburbs, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, says Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous lowball offer reminiscent of the recession years tell listing agents “don’t even bother” with them. After all, there’s an excellent chance there will be a realistic offer shortly – maybe more than one.

In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., says lowball frequency and efficacy depend on the specific neighborhood or town. “We still see them, and we try to work with them” in communities where prices are soft and the impacts of tough economic times persist, she said. Elsewhere, though lowball offers are down, she urges sellers to stick with it and negotiate. Recently a lowballer came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.

Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while lowball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today’s environment. But Matarese has no problem with this – “You can’t blame a buyer for trying to get a good deal,” she says, but the fact remains: They usually risk losing the house.

The take-away here: Rolling lowballs at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.

Update: Following a recent column on FHA’s controversial tightening of rules on collection accounts, the agency postponed the effective date of the policy change to July 1 from April 1.

Wednesday, June 13, 2012

Homebuyers find market isn’t what they expected


LOS ANGELES – June 13, 2012 – A shortage of “move-in ready” homes and bidding wars over houses in good condition are leaving potential buyers scrambling to find a home to buy, according to media reports.

Housing inventories have shrunk nationwide, leaving home shoppers with fewer options. Bidding wars are back, and in some markets the shortage is prompting buyers to try to bid on homes even before they are listed, reports The Los Angeles Times.

In April, the number of for-sale homes was 2.5 million, which marks the lowest number for an April since 2006, according to National Association of Realtors®’ (NAR) housing data.

“The sharp drop in inventory along with rock-bottom interest rates have helped stabilize even some of the hardest-hit markets, including the Southland, Las Vegas, Phoenix and Miami,” The Los Angeles Times reports. “Some real estate professionals are concerned that the lack of inventory might turn off potential buyers, stifling the recent recovery in home sales.”

While buyers are suddenly feeling a sense of urgency, sellers are feeling they can wait, says Glenn Kelman, chief executive of Redfin.

Meanwhile, investors are snatching up bank-owned properties at bargains, new construction remains at historic lows, and homeowners are taking a “wait-and-see-approach” before they list their homes. That’s left many buyers scrambling to find a property.

Some homeowners are hesitant to sell, held back by negative equity and waiting for more of a bounce-back in home prices before they list.

"With the downturn, it seems like there are a lot of people who have been waiting in the wings to pounce, and because the rates are low, there is just a lot more competition," says one LA-area home shopper, Eddie David, who says he and his wife have been outbid on three different properties recently. "We tried to get in on a couple other homes, and even though it had been just a week or two weeks, it was just too late."

More details of story.