SAN DIEGO REAL ESTATE AGENT BLOG » existing home sales

December home sales down nearly 17 percent

Michael Carter - San Diego Real Estate Agent — Mon, 25 Jan 2010 15:51:12 +0000

WASHINGTON — Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

“It’s ‘exit stage left’ for first-time homebuyers,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The median sales price was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. However, some of that increase could be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago, but down 25 percent from the peak more than four years ago.

The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March – a month before the newly extended tax credit runs out.

Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That’s a 7.2 month supply at the current sales pace, close to a healthy level of about 6 months.

Total sales for 2009 closed out the year at 5.16 million, up about 5 percent from a year earlier. That was the first annual sales gain since 2005. But prices fell dramatically last year, declining 12.5 percent to a median of $173,500, the largest decline since the Great Depression.

Though the results missed Wall Street’s expectations, the Realtors’ group says there are signs the market is finally stabilizing.

“There is some sustainable momentum building in the housing market right now,” said Lawrence Yun, the group’s chief economist. However, he cautioned that the recovery will depend on whether the economy starts adding jobs in the second half of the year.

Many experts project home prices, which started to rise last summer, will fall again over the winter. That’s because foreclosures make up a larger proportion of sales during the winter months, when fewer sellers choose to put their homes on the market.

Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.

“We do not believe it is fair to consider this a double dip in the housing market,” Michelle Meyer, an economist with Barclays Capital, wrote last week. “The recovery is still under way, but hitting some bumps in the road.”

By Alan Zibel, Associated Press

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Existing home sales slide unexpectedly

Michael Carter - San Diego Real Estate Agent — Mon, 28 Sep 2009 15:31:15 +0000

The report breaks a four-month streak of increases with a dip of 2.7% in August.

NEW YORK (CNNMoney.com) — Existing home sales fell in August, snapping a four-month streak of increases, according to a report released Thursday.

Sales of previously-owned homes fell 2.7% last month from July, but were up 3.4% from a year ago, said the National Association of Realtors.

Sales had jumped 15.2% in the previous four months.

“This is an unpleasant surprise,” said Ian Shepherdson, economist at High Frequency Economics, in a research note.

The NAR report said August home sales hit a seasonally-adjusted annual rate of 5.1 million units, down from 5.24 million in July. That’s well below the analyst consensus estimate of 5.35 million annual units compiled by Briefing.com.

Shepherdson noted that the July pending sales index, which had been a good predictor of actual sales lately, pointed to sales hitting 5.4 million units or even more.

“The gap between the two numbers is not unprecedented, but we had hoped for better,” he said.

The August numbers fell despite low mortgage rates, as well as home prices that have come down significantly in the past year.

“The decline demonstrates we can’t take a housing rebound for granted,” Lawrence Yun, NAR chief economist, in a prepared statement.

The median price of homes sold in August was just $177,700, a 12.5% year-over-year drop.

Foreclosures. The NAR report said distressed properties, which include foreclosures and short sales, are pushing down the median price because they typically sell for 15-20% less than traditional homes. Distressed property sales comprised 31% of home resales in August.

But low prices and distressed sales don’t explain the sudden sales dip, said High Frequency Economics analyst Shepherdson. “[The August report] could just be noise; we await the next pending sales index with some trepidation.”

NAR’s Yun said the Obama administration should extend the $8,000 tax credit it made available for qualified first-time home buyers, to help boost sales. That credit is currently slated to expire on December 1.

“With an expected rise in foreclosures over the next 12 months we need to maintain a healthy level of ready buyers to absorb the inventory,” Yun said in a statement.

Despite the decrease in sales, the supply of homes on the market fell significantly in August. Total housing inventory fell by 10.8% to 3.62 million existing homes for sale. That’s an 8.5-month supply, down from a 9.3-month supply in July.

Where homes are selling. Regionally, the Northeast saw the smallest dip in sales, down 2.2% to an annualized rate of 910,000 homes in August. That was 5.8% higher than last year’s rate. The median price of homes sold during the month was $241,100, down 10.5% from last year.

In the West, sales fell by 2.7% to a rate of 1.16 million, which was 7.4% higher year-over-year. Prices there have sunk 12.2% since 2008 to a median of $220,500.

Sales in the South were down 3.1% from July to a rate of 1.89 million. That’s up 1.6% from August 2008. Since that time, home prices have dropped 11% to $157,400.

The Midwest market fared the worst last month, with existing home sales down 6.6% from July to a rate of 1.14 million, unchanged from a year ago. The median price there was $149,900, down 10.4% from last year.

By Julianne Pepitone, CNNMoney.com staff reporter

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774