Existing-Home Sales Show Modest Gain

Sales of existing-home sales increased in May with buyers responding to lower home prices, NAR says.

Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 2 percent to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April, but are 15.9 percent below the 5.93 million-unit pace in May 2007.

NAR President Richard F. Gaylord says buyers are seeing value in the current housing market. “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he says. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”

The national median existing-home price for all housing types was $208,600 in May, down 6.3 percent from a year ago when the median was $222,700.

Housing Inventories

Lawrence Yun, NAR chief economist, says there’s still a lot of inventory in the market. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he says. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”

Total housing inventory at the end of May fell 1.4 percent to 4.49 million existing homes available for sale, which represents a 10.8-month supply at the current sales pace, down from a 11.2-month supply in April.

Sales Activity Picks Up

Although conditions remain mixed around the country, unpublished snapshot data shows a number of areas are experiencing much higher sales activity than May 2007, including Sacramento, the San Fernando Valley and Monterey County in California; Sarasota, Fla.; and Battle Creek, Mich.

“Keep in mind that the volume of home sales is the primary driver of economic activity that is tied to housing,” Yun says. “It’d be premature to say the improvement marks a turnaround. The market is fragile, so a first-time home buyer tax credit and a permanent raise in loan limits would be important steps to get the housing engine humming.”

Single-family home sales rose 1.6 percent to a seasonally adjusted annual rate of 4.41 million in May from 4.34 million in April, but are 14.5 percent below the 5.16 million-unit pace in May 2007. The median existing single-family home price was $206,700 in May, which is 6.8 percent below a year ago.

Existing condominium and co-op sales increased 5.5 percent to a seasonally adjusted annual rate of 580,000 units in May from 550,000 in April, but are 24.6 percent lower than the 769,000-unit level a year ago. The median existing condo price was $223,400 in May, down 2.1 percent from May 2007.

By Region

Here's how existing-home sales fared across the country:

*Midwest: rose 5.5 percent in May to a pace of 1.16 million but are 16.5 percent lower than a year ago. Median price: $165,300, which is 0.7 percent below May 2007.

*Northeast: rose 4.6 percent to an annual rate of 910,000 in May, but are 15.0 percent below May 2007. Median price: $278,000, down 2.4 percent from a year ago.

*West: increased 2 percent to an annual pace of 1.02 million in May, but are 12.8 percent below a year ago. Median price: $286,600, which is 16 percent lower than May 2007.

*South: slipped 0.5 percent to an annual rate of 1.91 million in May, and are 17 percent below May 2007. Median price: $175,000, down 4.3 percent from May 2007.

Source: NAR

With the inventory going down & home sales going up, this is a clear sign that the market is starting to pick up. The current trend right now is picking up the bank owned properties (REO's) for a fraction of what they're really worth. Those REO's are affordable so the competition is getting fierce. It's not rare that homes priced well below market value are getting multiple offers on the table within days of being listed.

I've said it before and I'll say it again... It's not a "down market", it's just a different one! Times are changing and it's time to start picking up the pieces. You may get a good deal out of it!

~Shielamarie

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FHA Waives 9--Day Waiting Period

The Federal Housing Administration is lifting the mandatory 90-day waiting period it instituted in 2003 that delays the sale of REO properties.

The waiting period, which never applied to properties sold by Fannie Mae, Freddie Mac, or state- and federally chartered financial institutions, was imposed to make flipping more difficult. But as the number of REO homes has grown, it has had the effect of flooding neighborhoods with properties.

The change may help reduce the impact of foreclosures on some neighborhoods, but it won’t have as significant an impact as some might think, says Glen Daniels director of real estate-owned properties for Foreclosure.com. Many of the REO properties don’t meet FHA standards and will require rehabilitation before they can be sold to an FHA borrower, he points out.

Source: Reuters News; Inman News, Matt Carter (06/13/08)

This is great news in the real estate world! FHA loans are making a huge comeback right now with the increased loan limits. The majority of my buyers have an FHA loan & it's the easiest way to obtain financing for first time home buyers.

Lifting the 90-Day waiting period means banks & investors can sell the property as soon as they obtain it. There used to be a 90-day probation period where it had to be in their name during that time (this was FHA's way of trying to avoid immediate flipping & turn arounds). But now that it's gone, that means buyers can obtain those properties right away without having to wait for 3 months. Good news, right? Right!

~Shiela

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