Monday, May 23 2011
Wednesday, April 27 2011
The news coming out of the home construction industry is cautiously positive. We do not think that we have overcome all the problems and obstacles, but all indications are that new home construction rates are on the rise. The report below shows positive signs and we can only hope this trend will continue. - RT
New home construction is picking up just in time for the spring buying season, according to the latest new-home report released on Tuesday from the Commerce Department. Builders broke ground on more new homes in March than in the last six months.
Monday, January 31 2011
Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors®
The Pending Home Sales Index,* a forward-looking indicator, increased 2.0 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, credits good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.
“In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”
The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago. Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
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*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 as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
NOTE: Existing-home sales for January will be reported February 23 along with revisions for the past three years, and the next Pending Home Sales Index will be released February 28. Fourth quarter metro area home prices and state home sales will be published February 10; release times are 10:00 a.m. EST.
Saturday, June 26 2010
Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of REALTORS®. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly revised surge of 5.79 million units in April. May closings are 19.2 percent above the 4.75 million-unit level in May 2009; April sales were revised to show an 8.0 percent monthly gain.
Buyers Face Purchasing Delays
Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. “We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.
“In addition, many potential sales are being delayed by an interruption in the National Flood Insurance Program. Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance.”
As the leading advocate for homeownership issues, NAR is supporting Senate amendments to extend the home buyer tax credit closing deadline through September 30 for contracts written by April 30, and to renew the flood insurance program. “Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues,” Yun noted.
Housing Still Affordable
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.89 percent in May from 5.10 percent in April; the rate was 4.86 percent in May 2009.
The national median existing-home price for all housing types was $179,600 in May, up 2.7 percent from May 2009. Distressed homes slipped to 31 percent of sales last month, compared with 33 percent in April; it was also 33 percent in May 2009.
NAR President Vicki Cox Golder said home prices have been stabilizing all year. “With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus,” she said. “Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle.”
Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.
A parallel NAR practitioner survey shows first-time buyers purchased 46 percent of homes in May, down from 49 percent in April. Investors accounted for 14 percent of transactions in May compared with 15 percent in April; the remaining sales were to repeat buyers. All-cash sales were at 25 percent in May, edging down from a 26 percent share in April.
Total housing inventory at the end of May fell 3.4 percent to 3.89 million existing homes available for sale, which represents an 8.3-month supply at the current sales pace, compared with an 8.4-month supply in April. Raw unsold inventory is 1.1 percent above a year ago, but is still 14.9 percent below the record of 4.58 million in July 2008.
Single-family home sales declined 1.6 percent to a seasonally adjusted annual rate of 4.98 million in May from a pace of 5.06 million in April, but are 17.5 percent above the 4.24 million level in May 2009. The median existing single-family home price was $179,400 in May, which is 2.7 percent above a year ago.
Single-family median existing-home prices were higher in 16 out of 20 metropolitan statistical areas reported in May from a year ago. In addition, existing single-family home sales rose in 18 of the 20 areas from May 2009.
Existing condominium and co-op sales fell 6.8 percent to a seasonally adjusted annual rate of 680,000 in May from 730,000 in April, but are 32.6 percent above the 513,000-unit pace in May 2009. The median existing condo price was $181,300 in May, up 3.4 percent from a year ago.
Source: NAR http://www.realtor.org/RMODaily.nsf/pages/News2010062201?OpenDocument
Wednesday, June 16 2010
As I said last month, sales in March and April were spectacular! Many of the contracts written in those months closed in May. Closed volume in May was at its highest level since June of 2007 and was $10 million higher than any month in over two years. All those closings also reduced our month’s supply of inventory to just over 6 months supply. That means our inventory of homes is at its lowest level in almost 4 years. All of that is great news, but real estate results and conditions should not be measured based only on one or two month’s activity. A longer period of time gives us a more accurate picture. Pended transactions declined significantly in May, partially as a result of the expiration of the tax credit. Closings will still be healthy in June, just not at May levels.
The key question now is where do we go from here? Although we will not see results like March and April anytime soon, there are several reasons, according to The Kiplinger Letter, to believe that housing sales are on a steady but slow increase. First home prices are very affordable. It now takes about 18% of the typical household income to meet principal and interest payments on a single family home which compares favorably with the long term average of 26%. Second, consumer confidence is improving which is critical to expensive, long term commitments, like home purchases. As I said a couple of months ago, three quarters of Americans believe now is a good time to buy. Third, there is a consensus that credit conditions will ease and that mortgage interest rates will remain at their very low level for several more months. We won’t, and we shouldn’t, go back to the freewheeling days of 2007 but a slight loosening of credit can be helpful without creating unreasonable risks.
The best tip I can give you about shopping for homes is to start at www.TheTrentiniTeam.com or www.FCTuckerEmge.com We just enhanced and enlarged the size of pictures on all listings and are in the process of making several other improvements which we will roll out later this year.
Kathy and I would like to take this opportunity to whish you happy summer holidays and above all safe travels.
Thursday, June 10 2010
The Federal Reserve’s periodic survey of economic conditions, known as the Beige Book, this week reported growth in all 12 regions for the first time since 2007.
New York. Commercial real estate leasing has picked up noticeably although vacancy rates continue to rise in some areas. Residential rents appear to have bottomed.
Tuesday, May 18 2010
As I said last month, pended transactions (signed contracts for sales not yet closed) for March were great. Pended transactions for April were simply off the chart. I believe that pended transactions for March and April combined were the best two month period in local MLS history. As a result, inventory was just over 7 month’s supply. I think the important questions, as a result of the past two months performance, are what does this mean and where are we going?
I think we know several things and we can draw some conclusions. First, closed transactions during May and June will be excellent. This will continue to keep inventory levels relatively low especially compared to unusually high levels we saw at the beginning of the year. I also believe that the homebuyer tax credits that expired at the end of April were clearly a factor in these remarkable sales numbers. The key question is: how big a factor were the tax credits? If average pended transactions for May-July are only down 25% from April’s spectacular numbers the housing market is in excellent condition. If pended transactions are down closer to 50% then we still have to wait for a fuller recovery. I believe that the number will be between 30-40%. That indicates that things have definitely improved and we are moving in the right direction, but we still have room for improvement.
Two other bright spots are an improvement in closed transactions over $200,000 and an improvement in sales price to list price percentage. For homes over $200,000 sales are up 31.3% in the first four months of this year compared to the same four months last year. Sales price to list price in April was 95.83%, the highest percentage in almost two years. This is another sign of our improving market.
School will be out soon and I’m looking forward to a great summer. It’s easy to look for homes anytime, regardless of the weather, at http://TheTrentiniTeam.com
Tuesday, May 18 2010
Housing starts rose 5.8 percent in April to an annual rate of 672,000 units, the highest level since October 2008, the Commerce Department said Tuesday.
Single-family home starts rose 10.2 percent, while multifamily starts declined 18.6 percent, reversing the trend from previous months.
New building permits, a gauge of future activity, declined 11.5 percent to an annual rate of 606,000, the lowest level since October 2009, Commerce also reported.
Source: Reuters News, Lucia Mutikani (05/18/2010) http://www.realtor.org/RMODaily.nsf/pages/News2010051806?OpenDocument
Thursday, May 13 2010
With the housing recovery still fragile, it’s hard to look ahead with anything but caution. However, the long-term prospects for the market are “incredible,” FHA Commissioner David Stevens told REALTORS® yesterday in the opening forum of the 2010 NAR Midyear Legislative Meetings & Trade Expo.
Young households today represent a demographic block larger than even the baby boomers, and their entry into the housing market promises to help build “an incredible real estate market in the future,” said Stevens. But first the housing market must move from recovery to stability and then to long-term growth, and that will only happen if investors regain confidence in the mortgage market. And for that to happen, the mortgage market must be reformed to reward transparent financing structures.
Stevens credited NAR’s role in helping Congress and the administration stabilize the market through its support of a “mosaic” of pragmatic policies, such as:
• The Federal Reserve’s $1.25 trillion dollar investment in Fannie Mae and Freddie Mac mortgage backed securities, which helped keep interest rates historically low.
That mix of programs has led to today’s housing recovery but the job won’t be finished, he says, until the federal government steps out of the picture and the market stands on its own. “We constantly talk about exit strategy,” Stevens said, referring to the administration’s goal of unwinding its mortgage-market interventions.
To help protect the recovery, Stevens urged REALTORS® while they’re in Washington this week to convince lawmakers to pass FHA reform legislation under consideration in the House as soon as possible. That legislation, H.R. 5072, would enable FHA to lower the upfront mortgage insurance premium and instead fold a higher annual premium into the loan, a change that would align FHA with the approach used in the private sector. The legislation would also give FHA more tools for clamping down on bad lenders.
The changes in the mortgage insurance premium are needed to help FHA improve its financial picture and restore its reserves to its congressionally mandated level. Not having the authority it needs to change its premium structure “is costing FHA $300 million a month in money it’s not getting,” he said.
“You are the recovery,” he told the packed room of REALTORS®. “Now we’ve got to finish the job.”