October Existing Home Sales : Buyers And Sellers In Balance

After two months of surging sales, home resales fell by 100,000 units last month to 4.4 million homes nationwide.

October's Existing Home Sales tally is slightly below the report's 6-month rolling average, according to the National Association of REALTORS® -- a time span which includes this year's $8,000 federal home buyer tax credit's tail end.

Housing statistics have been wildly inconsistent during that period.

For the future of housing markets, though, it's encouraging that first-time and investment property buyers were both outnumbered by "move-up" buyers; buyers that have sold their respective homes in favor of larger ones. It's the move-up buyers that power housing.

In October, buyer profiles broke down as follows:

• First-time buyers : 32 percent of all buyers, unchanged from September
• Repeat home buyers : 49 percent of all buyers, down one tick from September
• Investors : 19 percent of all buyers, up one tick from September

As a point of comparison, first-timers represented 50 percent of all purchases in October 2009.

For home buyers, October's Existing Home Sales report is neither weak nor strong. It signals that, with mortgage rates low and home affordability high, housing may be reaching some form of balance. Because -- although home sales are down -- home supplies are down, too.

We can infer that buyers outnumber sellers, but probably not by much. In most areas, negotiation leverage is still up for grabs.

At the current pace of sales, the complete housing stock would be depleted in 10.6 months.

Pending Home Sales Slip In September, Suggesting A Buyer's Market Until January

After 3 straight months of improvement, the Pending Home Sales Index slid lower in September. As compared to August, September's reading fell 2 percent.

A "pending home sale" is a home under contract to sell, but not yet closed. The data is drawn from a combination of local real estate associations and national brokers, and represents 20 percent of all purchase transactions in a given month.

Because of the large sample set, and because 80 percent of homes under contract close within 60 days, the Pending Home Sales Index is a terrific future indicator for the housing market. A high correlation exists between the Pending Home Sales Index and the NAR's monthly Existing Home Sales report issued two months hence.

Expect home sales to idle into the New Year, therefore.

For home buyers in , this is good news. Over the last two months, housing markets have overwhelmingly favored home sellers.

Consider than, since June, the volume of both new home sales and existing home sales has increased, causing the available home inventory to fall by months. Meanwhile, helped by low interest rates, demand from buyers has remained relatively stable.

As with everything in economics, falling supply with constant demand leads to higher prices.

Therefore, the Pending Home Sales Index's fading September figures suggest a more balanced supply-and-demand curve in the months ahead, a move that should suppress rising home prices and shift negotiation leverage back to the buy-side. 

So long as mortgage rates remain rock bottom, the autumn season is looking like a terrific time to buy.

Existing Home Sales Jump; Housing Market Shows Spark

Existing home sales jumped 10 percent in September, the biggest monthly jump on record and a signal that the housing market may be returning to a normal sales pattern post-$8,000 federal tax credit.

Existing Home Sales counts home resales (i.e. not new construction) and 80 percent of home resales close within 45-60 days. It's no surprise, therefore, September's data is strong.

Throughout the July and August, mortgage rates were in free-fall, pushing home affordability to near-record levels. Concurrently, the number of homes available for sale climbed to multi-year highs.

"Deals" were in ample supply this summer and eager home buyers snatched them up.

Some of these deals included "distressed properties", a categorization that includes homes in various stages of foreclosure or short sale, accounted for 35 percent of all sales, an uptick of 1 percent from August.

According to the National Association of Realtors®, home resales split as follows:

• First-time buyers : 32 percent of all buyers
• Repeat home buyers : 50 percent of all buyers
• Investors : 18 percent of all buyers

By contrast, in November 2009, first-timers accounted for more than half of all resales.

For home buyers, September's Existing Home Sales report foreshadows a more competitive housing market through the New Year. In addition to rising sales volume, home supplies are down by nearly 2 months from July.

At the current pace of sales, the complete housing stock would be depleted in 10.7 months.

Existing Home Sales Rebound In August, Give Hope For Autumn

Sales of existing homes in recovered in August, perhaps the result of a post-tax credit normalization.

As compared to July, Existing Home Sales rose 8 percent in August, buoyed by falling interest rates and slow-to-rise home prices. There's lot of "good deals" out there and home buyers are taking advantage.

The housing gains are relative, however. August's total units sold barely crossed 4 million and still trails the average figures of the last few years by close to 1 million units.

Despite that, the August Existing Home Sales report can be considered a strong one. This is for several reasons:

1. Sales volume increased in August without tax credit or government intervention
2. Sales growth is not limited by geography. All 4 regions -- Northeast, Southeast, Midwest, and West -- showed improvement last month.
3. Repeat buyers are driving the market, representing 48 percent of sales, up from forty-three percent in July.

And, perhaps most important to the housing market market, the number of available home resales dropped by almost one full month last month.  At the current sales pace, the national inventory would be depleted in 11.6 months.

For home buyers, the data presents an interesting opportunity. With average mortgage rates rising from their best levels ever and home affordability cresting , this autumn may represent the turn-around point for the housing market nationwide.

If you're planning to move in early-2011, consider moving up your time frame.

Home Sales Are Back On The Rise After A 2-Month Pullback

Just one week after reports of Existing Home Sales and New Home Sales plunging, the housing market is signaling that auturm may fare better than did summer.

The number of homes under contract to sell rose 5 percent in July.

The data comes from the July Pending Home Sales Index, as published by the National Association of Realtors®. By definition, a "pending home sales" is a home that is sold, but not yet closed.

Historically, 80% of such homes close within 60 days which makes the Pending Home Sales Index an excellent, forward-looking indicator for the real estate market.

Indeed, the nationwide drop in home sales this summer was foreshadowed by the Pending Home Sales report.  The index dropped 30 percent in May. Then, two months later in July, it was shown that Existing Home Sales volume dropped 29 percent.

That's a strong correlation.

Now, to be fair, the July Pending Home Sales Index is still relatively low; the second-lowest on record and well below last year's numbers. But, the tick higher last month shows how housing may be stronger than than what the headlines report.

It appears that buyers took advantage of rising inventory, cheap financing, and stagnant prices, and pushed the market forward. We should expect similarly promising numbers when September's Existing Home Sales data is released.

New Home Sales Drop In July -- Just Like Existing Home Sales

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months.  At July's rate of sales, the nation's new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It's all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April.  A "housing start" is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down.  The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there's two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific  for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home may have just become cheaper.

Existing Home Sales Plummet In July; Home Buyers Gain Leverage

The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®' Existing Home Sales report.

It's a drop of 27 percent from June; single-family home resales are at the report's lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers , the Existing Home Sales report is a bit of bad news.  Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices.  It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too. 

Although there's reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today's rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Mortgage rates are down 0.75 percent since mid-April.

Existing Home Sales Drop In June But Hint At Support For Higher Price Tiers

Consistent with most post-home buyer tax credit housing news, the National Association of Realtors® says Existing Home Sales eased lower last month.

An "existing home" is a home that cannot be considered new construction.

The 5 percent drop in sales from May to June was expected, but a closer look at the month's data reveals some interesting trends.

First, repeat buyers accounted for 44 percent of home resales in June, up from 40 percent in May. That's a healthy increase for just 4 weeks' time and the tax credit is a likely catalyst. First-timer buyers bought starter homes owned by former first-timers, who were then free to "move up" to larger, more expensive property.

Housing markets can be trickle-up and, not coincidentally, the jumbo/luxury housing market is now in the midst of rebound.

Second, June's "distressed sales" accounted for 32 percent of all home resales, up from 31 percent in May.

A figure like this hints at the large role foreclosures continue to play in a home buyer's home search strategy.  And why not? The National Association of Realtors® suggests that distressed homes are sold at a 15 percent discount.

Lastly, take note that home inventories are rising. June's 8.9 months of supply is the highest in 10 months. Excess supply leads home prices lower, all things equal.

Overall, the Existing Home Sales data from June is a mixed bag. There's support for the middle- and upper-price tiers, but a growing overhang of supply. The market looks favorable for buyers given low mortgage rates and strong negotiation leverage.

June Existing Home Sales Report headline

May Shows a Continued Strong Pace for Existing Home Sales- National Association of Realtors (NAR)

Is May’s Home Sales Decline an Alarming Signal of What’s to Come?- headline of an article in Housing Wire

Both of the above headlines appeared this past Wednesday. They seem to be reporting conflicting news as NAR speaks of a ‘continues strong pace’ while Housing Wire showed ‘alarm’ regarding the ‘sales decline’. How can two different news reports say exact opposite things on the same day? The most amazing thing is that both articles were written about the same report – NAR’s Existing Home Sales Report. And, both headlines were correct!

There are nuances in the report and both media sources decided to report on a different nuance. NAR correctly announced that sales were up and they were. This May’s sales were up over 19% from May of last year. Housing Wire showed alarm that sales had dropped and they did. Sales in May were 2.2% lower than they were last month (April).

If you are either buying or selling a home, the headlines can be very confusing. It may seem that the housing market is going up and down at the same time. Let me bring some clarity to reports you will see throughout the summer on the two key issues in real estate.

SALES

This one could drive you crazy. NAR will issue two reports each month. One is the Pending Home Sales Report which covers the homes that go into contract the previous month. The other is the Existing Home Sales Report which covers the houses that closed the previous month. The Existing Sales report will deliver great news over the summer as it will be reporting on the homes that are currently closing but went into contract before the tax credit expired (April 30). The Pending Sales Report will report on houses going into contract after the expiration of the tax credit. Those numbers will not be anywhere as strong. Since both will be released each month, it will seem like conflicting news.

PRICES

This is another item that will lead to confusion over the next few months. First, each pricing report (there are seven major reports) measure different data. Some look at the price per square foot, some look at like houses and others just look at average sales price. Some look at data as recent as one month ago and others look at data that is three months old. Some look at homes only up to certain price points and others look at all price points. Since they are not comparing apples-to-apples, there will be many differences in their reports.

There can even be confusion if they are looking at only one data point. Let me give you an example that is happening right now: average sales price. There are some reports saying that the average price of homes selling is increasing and they are correct. That does not mean however that prices on individual homes are increasing. If more first time homes were purchased in April because of the tax credit, prices would be relatively low because the first time buyer often buys entry level homes in the community. If, in May, more second time buyers were purchasing their move-up home, the average price in that region would increase. That does NOT mean the average price of entry level homes would increase. It just means that the ‘mix of homes’ sold weighed more heavily to the second time (and more expensive) home.

What does this mean to you?

Whether you are buying or selling, I strongly suggest you sit down with a professional who is capable of explaining the headlines and informing you how the news will actually impact your outcome.

Buyers Take The May 2010 New Home Sales Data All The Way To The Bank

One month after the federal homebuyer tax credit's official expiration, the New Home Sales report turned in its worst showing ever.

In May 2010, for the first time in 11 months, the inventory of unsold new homes crossed the 8-month marker, posting an 8.5 month supply overall.

Additionally, new homes sales volume fell to 300,000 units nationwide -- a drop of 32% and its lowest level since the Commerce Department started tracking data in 1963.

Now, universally, the press is referring to the May New Home Sales report as "poor".  A closer look, however, shows that may not be the case.

For one, we have to keep New Home Sales in perspective as a percentage of overall home sales. Yes, there were just 300,000 new homes sold in May, but there were also 5.66 million "existing" homes sold.

New Home Sales, therefore, accounted for just 5 percent of the total housing market -- a very small percentage.

Another reason why the weak New Home Sales data isn't so awful is that, when New Home Sales stall, it actually benefits home buyers.  Excess supply puts a strain on sellers which, in turn, gives buyers a tremendous amount of leverage in negotiation.

When home inventories are high, builders are more apt to appease their customers in hopes of making a sale.  For home buyers, this can result in buying a better product at a lower price.

Especially with builder confidence plummeting.

Since February 2009, housing has shown steady gains. There's been both peaks and valleys across units, inventories, and prices, but overall, the market is improving.  May's New Home Sales data shows how now may an opportune time to "buy new".

May 2010 Existing Home Sales Is Better Than The Headline Data Suggests

Existing Home Sales dropped in May for the first time in 3 months but still managed to post its second-highest since November 2009, buoyed by the expiring federal tax credit program.

An "existing home" is a home that cannot be considered new construction; a resale of an existing home.  Existing Home Sales fell 2.2 percent in May.

The press is calling the drop in sales "unexpected" and disappointing, but a deeper look at the data shows the news isn't as bad as it first appears.

First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.

• Northeast : -18.3 percent
• Midwest : 0.0 percent
• South : +0.5 percent
• West : +4.9 percent

Second, the supply of homes for sale dropped to 8.3 in May and, because home prices are based on supply and demand, this is a positive for pricing.

By comparison, in 2008, the average existing home inventory was 10.4 months.

And, lastly, in May, first-time home buyers represented 46 percent of all buyers. The number was likely buoyed by the tax credit program but that doesn't damper the fact that first-time buyers provide a support floor for the housing market. 

First-time buyers enable "existing owners" to move-up to bigger homes, which, in turn, trickles up to the mid-size and jumbo markets.

Analysts expected more from May's numbers and that may explain why the reaction to the data is generally negative.  However, in many cities, home resales did just fine.

Pending Home Sales Data Shows Great Deals On Homes Are Getting Harder To Find

The Pending Home Sales Index shot higher in April as low mortgage rates and a soon-to-expire federal tax credit spurred home buying across the county.

A "pending home sale" is a home that's under contract to sell but not yet closed.

Region-by-region, April's pending home sales varied versus March's data:

• Northeast Region: +29.5%
• Midwest Region : +4.1%
• South Region : -0.6% (after a +15.9% posting in March)
• West Region : +7.5%

On an annual basis, the Pending Home Sales Index is higher by 22 percent.

April marks the third straight month that pending home sales are up and today's buyers should take note. This is because, according to the National Association of Realtors®, 80% of homes under contract close within 60 days.

In other words, May and June's existing home sales data should be similarly strong, causing the real estate market to gently shift in favor of sellers.  In fact, already, we're seeing home resales touch multi-year highs while new home supplies fall to multi-year lows.

All of it tends to push home prices higher while simultaneously reducing buyer negotiation leverage. That, coupled with the high probability of higher mortgage rates ahead, means that finding "deals" will get tougher for the average home buyer.

In looking at the housing market data, it appears that the best month in which to have bought a home this year was February.  The next best time may be right now. 

Talk to your real estate agent if you're planning to buy a home this year.  It may be sensible to move up your time frame a few months.

The Supply Of New Homes For Sale Just Dropped Off A Cliff

The supply of newly-built homes for sales plummeted in April, a positive indicator for the housing market as we head into the summer months.

It's no wonder that homebuilders are breaking new ground at the fastest clip in 2 years. 

At the current sales pace, the nation's complete supply of new homes would be sold in just 5 month's time.  That's more than double the pace of a year ago.

Also, as more good news, in terms of total housing units, the government reports that New Home Sales topped one half-million homes sold for the first time since May 2008.

It's a similar spike as within the Existing Home Sales data released earlier this week.

But before we declare the housing market "repaired in full", we have to consider a few of the reasons why home sales are charting so strongly.

The first reason is the federal homebuyer tax credit's April 30 expiration. In order to claim up to $8,000 in tax credits, home buyers must have been in mutual contract for a property before May 1. There is no doubt this contributed to a run-up in sales, especially among first-time home buyers.

The second reason is that mortgage rates have remained exceptionally low, defying expert predictions.  Low rates don't sell homes, but they do make monthly payments easier to manage for households torn between renting or buying.

And, lastly, March and April's new home sales may have been buoyed by aggressive discounting on behalf of homebuilders.  As compared to February 2010, April's average new home sale price was lower by 13 percent.  That's a sharp drop in a short period of time.

For now, though, homes are selling, supplies are dropping, and buyer interest is high. It's no wonder builder confidence is soaring.

Home Supplies Tick Higher, Creating An Opening For Today's Home Buyers

Sales of existing homes rose in April, buoyed by an expiring home buyer tax credit and exceptionally low mortgage rates.

As compared to March, April's Existing Home Sales rose by 410,000 units nationwide -- the second straight month of large gains. An "existing home" is a home resold by a prior owner (i.e. not new construction).

It's a solid report for housing overall, with rising sales suggesting that the real estate market's recovery is ongoing. However, the data presented a mixed message.

According to the National Association of Realtors®, although the number of homes sold ticked higher in April,  so did the supply of existing homes for sale, too.

Sellers are now listing homes faster than buyers can buy them.

After adding another 0.3 months of supply in April, resale home supply is nearly two full months larger than at November 2009's low-point. This put downward pressure on home prices.

Furthermore, because 49% of April's buyers were first-time buyers and the tax credit has since ended, we can expect that sellers will continue to outweigh buyers in the months ahead.

It presents an interesting opportunity for June's home buyers. Mortgage rates are still at their lowest levels of the year -- despite expert predictions to the contrary -- and homes remain affordable. Plus, in a lot of markets, home values have started to creep higher.

There's good values and good rates but neither should last long. For the next few weeks, real estate may be in its 2010 sweet spot. 

If you were thinking of moving in September of this year or later, consider moving up your timeframe.

Home Resales Boom Into The End Of The Tax Credit; Home Values Seen Rising.

Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.

Furthermore, versus March 2009 -- a month many people equate to the low point of the U.S. economy -- sales volume was up 16 percent.

"Existing home sale" is the technical term for a home resale; a home previously inhabited by a person.  It's the opposite of a "new home sale" which is a sale of a newly-constructed home.

Existing Homes Data is tracked by the National Association of Realtors® and a closer look at the March data reveals some other interesting notes:

1. Year-over-year sales are higher for the 9th straight month
   
2. Real estate investors represented 19 percent of all homes purchased
   
3. First-time home buyers account for 44 percent of all buyers

Also worth noting is that the supply of available homes is down on a broader basis.  At the current rate of sales, the existing home inventory will be exhausted in 8 months.

Despite banks releasing foreclosures and REO into the market, that's still one half-month less from February.

When supplies drops, home prices tend to rise. It suggests an underlying strength in housing that should support home prices through the next few months -- especially as the home buyer tax credit finishes working its way through the system.

That said, real estate markets are local. You shouldn't assume that what's happening on the national level is also happening here at home.  Be sure to check with your real estate agent about local market conditions before making a decision to buy or sell.