The supply of homes for sale is now at the lowest level since the National Association of Realtors began tracking inventory 18 years ago.
While all real estate is local, the problem is national. From coast to coast, buyers shopping in this spring market are finding less and less. What is listed is going fast — and selling at a premium.
In Southern California, home sales in February were 14 percent lower than the average for the month going back 30 years, according to CoreLogic. There are plenty of potential buyers out shopping, but they simply can’t afford what they find.
“Activity continues to be constrained by the decline in affordability and the relatively thin inventory of homes for sale,” said Andrew LePage, research analyst at CoreLogic. “San Bernardino County, which has the region’s lowest median sale price and entices many first-time buyers and others priced out of coastal markets, was the only Southern California county to post a year-over-year increase in sales this February.”
Housing starts are still only about 75 percent of their historical average, and what the builders are putting up is in the pricier, move-up category. The biggest problem is starter homes — the severe lack of them. Builders say their costs for land, labor and materials are too high right now, and starter homes squeeze their margins.
The median price of a newly built home did fall 5 percent in February, according to the U.S. Census, which could be a good sign or a monthly aberration.
“It’s hard to understate how important it will be for builders to continue adding new inventory to the market, especially in the low- and mid-priced segments where so much of the current home buyer demand lies,” said Svenja Gudell, chief economist at Zillow, who applauded the February price drop.
“But a few months of good progress won’t meaningfully change the dynamics of this year’s home shopping season — inventory is tight, competition will be fierce, and buyers need to be prepared to weather some frustration and show a lot of patience.”
But builders aren’t the whole crux of the problem. During the housing crash, investors purchased about 4 million distressed properties, the vast majority of them low-priced, starter homes. The expectation was that they would wait until home prices recovered and then sell them back out into the market. That has not happened, despite home prices exceeding their previous peak in some markets.
“Investors came in to get that cash flow, and the cash flow remains very positive,” said Lawrence Yun, chief economist at the National Association of Realtors. “The price appreciation is just extra gravy that they’re witnessing, and they’re saying they’re going to ride out this price increase.”
Strong price appreciation may also be adding to the lack of supply of homes for sale. On average, the more a local market has recovered, the larger the drop in inventory it’s seen, according to a new survey by Trulia.
“If you have a lot of equity in your home, that could be great to use to buy another one, but if that other home you might buy is that much more expensive than it was last year, you may stay put and you may renovate instead,” said Ralph McLaughlin, chief economist at Trulia.
In fact the remodeling industry has already seen big gains in the past year and expects more. Not only are homeowners doing more projects, they’re doing more expensive projects because now they have the home equity to afford them.
“During the economic downturn people were just doing the necessary maintenance on their home, and they weren’t doing a lot of discretionary or lifestyle improvements. Now we’re starting to see those discretionary and lifestyle improvements happen,” said Brad Hunter, chief economist at HomeAdvisor, a remodeling website. “People are going for their dream home more than before.”
That may bode well for home improvement retailers, but it does nothing to ease the supply shortage for potential homebuyers.
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((Public relations firm corrects Blefari’s title to chief executive officer from president in paragraph 4 in this story published on March 22))
((Public relations firm corrects Blefari’s title to chief executive officer from president in paragraph 4 in this story published on March 22))
By Lucia Mutikani
WASHINGTON U.S. home resales fell more than expected in February amid a persistent shortage of houses on the market that is pushing up prices and sidelining prospective buyers.
The National Association of Realtors said on Wednesday existing home sales declined 3.7 percent to a seasonally adjusted annual rate of 5.48 million units last month after hitting a 10-year high in January.
Sales were up 5.4 percent from February 2016, underscoring the sustainability of the housing market recovery despite the supply constraints. The median house price surged 7.7 percent from a year ago to $228,400 in February. That marked the 60th consecutive month of year-on-year price gains.
“There is a small supply of homes for sale and great demand for them, and that’s driving prices higher in many markets. We believe the strong appetite for homes will continue, people just need more homes to choose from,” said Gino Blefari, chief executive officer at Berkshire Hathaway HomeServices in Orange County, California.
Economists had forecast sales decreasing 2.0 percent last month. In February, houses typically stayed on the market for 45 days, down from 59 days a year ago. Despite February’s sales drop, the housing market was on track to again contribute to economic growth in the first quarter through increases in homebuilding and broker commissions.
U.S. financial markets were little moved by the data as investors focused instead on potential delays to President Donald Trump’s economic agenda, including his pledge to cut taxes.
The PHLX housing index fell 0.5 percent. U.S. stock indexes were mostly weaker while prices for U.S. government bonds rose. The dollar fell against a basket of currencies.
Economists said there were few signs sales had been significantly affected by rising mortgage rates. Although annual wage growth has stubbornly remained below 3 percent, economists expect an acceleration as the job market, which is near full employment, tightens further.
The 30-year fixed mortgage rate is hovering at 4.30 percent.
The Federal Reserve last week raised its benchmark overnight interest rate by 25 basis points to a range of 0.75 percent to 1.00 percent. The U.S. central bank has forecast two more rate hikes for 2017.
LAND, LABOR SHORTAGES
A separate report from the Mortgage Bankers Association onWednesday showed applications for loans to purchase homes fell 2.7 percent last week from near a four-month peak.
“Despite supply constraints, we see a resilient labor market and solid real income gains as likely to support a decent pace of home sales ahead, although given the backup in rates we may experience some pullback in the near term,” said Kevin Cummins, a senior economist at Natwest Markets in Stamford, Connecticut.
Last month, sales fell in the Northeast, West and Midwest regions, but rose in the South. Though the number of homes on the market increased 4.2 percent to 1.75 million units last month, housing inventory remained near the all-time low of 1.65 million units hit in December. Supply was down 6.4 percent from a year ago.
Housing inventory has dropped for 21 straight months on a year-on-year basis. Builders have been unable to fill the inventory gap, citing rising prices for materials, higher borrowing costs, and shortages of lots and labor.
Lennar Corp, the second-largest U.S. homebuilder, reported on Tuesday a drop in quarterly gross margin as the company struggled with higher land and construction costs.
Lennar, however, sold 5,453 homes in the first quarter ended Feb. 28, up from 4,832 homes in the year-earlier period, and reported a 12 percent jump in orders.
The NAR estimates housing starts and completions should be in a range of 1.5 million to 1.6 million units to alleviate the chronic shortage. Housing starts are running above a rate of 1.2 million units and completions around a pace of 1 million units.
At February’s sales pace, it would take 3.8 months to clear the stock of houses on the market, up from 3.5 months in January. A six-month supply is viewed as a healthy balance between supply and demand. While higher prices are increasing equity for homeowners and might encourage some to put their homes on the market, they could be hurting first-time buyers, who accounted for 32 percent of transactions last month.
That was well below the 40 percent share that economists and realtors say is needed for a robust housing market but up from 30 percent a year ago.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
By Parke Shall
A new Reuters article out this morning makes it look to us as though recapitalization is now the primary objective for both Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC). Today we wanted to analyze this new piece of journalism as well as offer our independent analysis of why we believe owning preferred shares of both entities is an investment that will be able to return multiples of capital invested. We also wanted to make a comment about why we don’t own common stock and what the timeline for a recapitalization could be.
Much of the focus this week was on Mark Calabria’s comments at the ABA Government Relations Summit, where he spoke about both Fannie Mae and Freddie Mac not having enough retained capital to position them safely in the event of any type of future crisis. He commented that a set of principles for a recap situation would likely be on the way in coming months,
Overhauling Fannie Mae and Freddie Mac is a financial regulation priority for the Trump administration, Vice President Mike Pence’s chief economist said Tuesday, adding that “a set of principles” will likely emerge in the coming months.
Mark Calabria told participants at the American Bankers Association Government Relations Summit in Washington that the administration is examining mortgage finance policy to “try to figure out, really, what should the best approach be?”
This morning’s article from Reuters seems to touch on the very same topic, indicating that not only have discussions been ongoing about retained capital, but also that this is the obvious route to a recapitalization. It seems as though they are even past recapitalization talks and are now zeroing in on dividend transfers. Reuters reported,
Instead, investors’ focus is shifting to how Mnuchin and Federal Housing Finance Agency Director Mel Watt, an Obama Administration holdover, will manage the dividends transfers.
Analysts expect the two institutions to make a full $10 billion dividend payment for the fourth quarter on March 31. But investors will be looking for any indication from Watt or Mnuchin about whether they plan to allow the mortgage firms to retain profits later on and begin the slow recapitalization process.
Though rebuilding an adequate capital buffer would take years – as long as two to three presidential administrations, according to one analyst – it would eventually allow Fannie and Freddie to leave government conservatorship, returning value to their investors.
This is astounding. We believe we are now past the point of wondering whether or not recapitalization is front and center on the agenda of the Trump administration. It is.
While we would have done a better job of naming this Reuters article (“Fannie, Freddie revamp plan unlikely this year” doesn’t allude to the optimistic content for Fannie and Freddie investors), the content speaks volumes regardless. It makes it very clear to us that ongoing discussions are already taking place on how best to remove Fannie and Freddie from government control.
The litigation that has driven down the stocks of both Fannie and Freddie over the last couple of months essentially becomes irrelevant if the government simply decides that they want to push forward with the recapitalization.
On top of this, the Reuters article notes that dividends are in focus, leading us to believe that there will likely be negotiations for current preferred shareholders to have access to the dividends that they were once entitled to. We continue to own preferred shares here and believe them to be a substantially better bet than the common. There was nothing in the Reuters article that stated to us that the common shareholders are going to get wiped out completely, but in any recapitalization process, owning the securities that are senior in the capital structure increases your chance of them being made whole again.
We don’t really see the point to owning the common, when the return on preferreds would likely be only slightly less in a best case scenario. Our advice to common shareholders would be to liquidate their positions and move into preferred shares. Again, this is just a move for safety and isn’t indicative of any concrete evidence that we have the common shareholders will get wiped out.
While the article states that action may not be taken until next year, that is really only several quarters away at this point. We will know if the government is serious about whether or not they want to follow through with this plan of retaining capital by the end of this month, when it is clarified as to whether or not they intend to keep the net worth sweep in place. If the government elects to allow Fannie and Freddie to retain capital this quarter or next quarter, it is a sure fire sign that the companies are at the beginning stages of the route to recapitalization.
The Reuters article is correct in stating that retaining capital as a safe haven by simply using the company’s profit streams could take more than a year. However, if new securities are to be issued in conjunction with ending the net worth sweep, it is not difficult to believe that an entire recapitalization process could be over and done with within the next 24 months. We remain long preferred shares of both entities.
Disclosure: I am/we are long FNMA AND FMCC PREFERRED STOCK.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Fannie Mae plans on leaving its current residence at 3900 Wisconsin Avenue next summer, so what should come to the site? The owners of the building, Roadside Development and Sekisui House, one of Japan’s largest developers, purchased the site for under $90 million last November and have since been collecting ideas. One particular idea is to bring a popular grocer to the development, more specifically Wegmans.
Washington Business Journal reported that Roadside Development is in talks with the grocer, further reporting that there is nothing definitive yet.
Other plans for the site include building art classes and performance spaces, hospitality space, a restaurant, and other retail spaces. There are also plans for “some sort of community amenity space,” according to UrbanTurf.
Fannie Mae’s current location spans approximately 248,000 square feet and was constructed in 1958. It is located on approximately 10 acres of land. When Fannie Mae moves, it will relocate to Midtown Center, which is the site of the former Washington Post headquarters.
• This popular grocer could anchor Fannie Mae HQ redevelopment [Washington Business Journal]
• What’s being considered for the former Fannie Mae site [Curbed DC]
Fannie Mae announced it completed the first two traditional Credit Insurance Risk Transfer transactions of 2017 covering existing loans in the company’s portfolio.
The two deals, CIRT 2017-1 and CIRT 2017-2, became effective on Feb. 1 and cover $20.4 billion in loans. Fannie Mae announced the deals are part of an ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market.
To date, Fannie Mae acquired nearly $4 billion of insurance coverage on just under $160 billion of loans through the CIRT program.
“These two CIRT transactions transferred $510 million of risk and were met with a record number of participants, which included sixteen reinsurers and insurers,” said Rob Schaefer, Fannie Mae vice president for credit enhancement strategy management.
“We are pleased with the growing interest in our CIRT program and will continue to take steps to build liquidity in the risk-sharing market through the regularity and transparency of our credit risk transfer transactions,” Schaefer said.
In the first deal Fannie Mae retains the risk for the first 50 basis points of loss on the $18.1 billion pool of loans. If this $90 million retention layer is exhausted, reinsurers will cover the next 250 basis points of loss on the pool, up to a maximum coverage of about $452 million.
On the second deal, the GSE will retain risk for the first 50 basis points of loss on a $2.3 billion pool of loans. If this $11.5 million retention layer is exhausted, an insurer will cover the next 250 basis points of loss on the pool, up to a maximum coverage of about $57.5 million.
Fannie Mae explained coverage for these deals is provided based on actual losses for a term of 10 years. Depending on the pay down of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each anniversary of the effective date thereafter.
Fannie Mae may cancel the coverage at any time on or after the five-year anniversary of the effective date by paying a cancellation fee.
As Reuters reports today, Members of Congress know they will not take up an overhaul of Fannie Mae and Freddie Mac this year. The Trump Administration, however, does not have the luxury of inaction. Even though the Administration itself probably lacks the bandwidth for major revisions to housing finance policy, it cannot avoid looming questions about whether to allow the mortgage finance giants to recapitalize.
Congress is grappling with landmark policy matters that have enormous and highly unpredictable political implications for both parties, such as health care and taxes, and the committees with jurisdiction on housing finance are otherwise occupied. As Reuters reported, the Senate Banking Committee is at square one on GSEs, having just begun weekly bipartisan staff briefings. The House Financial Services Committee, meanwhile, is focused on rolling back parts of the Dodd-Frank financial reform law and issues other than Fannie and Freddie.
Even without the political earthquake Trump triggered, GSE reform was not likely to have originated on Capitol Hill. As was evident in recent Congresses, the complexity of both the politics and the policy of how to either shutdown or rebuild new and improved government sponsored enterprises (GSEs) was too heavy a lift, especially since it was not a top priority for the Obama Administration. Bipartisan proposals, such as legislation offered by Sen. Bob Corker (R-TN) and Sen. Mark Warner (D-VA) stalled under scrutiny about their implications for taxpayers and homebuyers.
Of more immediate consequence is that Fannie Mae and Freddie Mac’s reserve capital is dwindling down to the point where a negative quarter in the housing sector would require a new infusion of cash from taxpayers. This would put both Congress and the Trump Administration in an unenviable position with the public; having to rationalize what will surely be termed a bailout. Such an announcement would underscore how the mix of inaction and ill-conceived actions during the last eight years continues and how, even with a new Congress and President, there is no resolution in sight.
Congress’ off-and-on interest in the GSEs aside, let’s remember that the Housing and Economic Recovery Act (HERA) designated the Federal Housing Finance Agency (FHFA) as conservator for Fannie and Freddie. HERA mandated that FHFA preserve the GSEs’ assets with the goal of returning them to a sound and solvent condition. Obama’s Treasury Department ignored that mandate in implementing the Net Worth Sweep in 2012 and FHFA Director Mel Watt and the Trump Administration will soon have to come to grips with that policy.
Over a year ago, Watt warned in a high-profile speech at the Bipartisan Policy Center that the day of reckoning was coming. Noting that the Sweep anticipated the dwindling of the GSEs’ capital to zero by 2018, Watt said it was his duty as “regulator and conservator” to be candid about the GSEs’ prospects under the Sweep.
In addition to warning that another infusion of taxpayer dollars in the event of a loss would be needed, Watt said such draws by Fannie and Freddie could reduce their ability to back mortgages, raising possible unease by investors in capital markets and undermining the ability of Americans to finance a home purchase.
A year later, the writing on the wall is bolder. Treasury Secretary Steven Mnuchin clearly wants to extricate Fannie and Freddie from government control but has not said how or when this will happen. Congress is not going to be much help in this regard. Watt might finally get the green light to use the power Congress gave him and suspend the payments of recent GSE profits to Treasury. That would not mean the end of the conservatorship, a return to business as usual, and the restoration of shareholder rights. It might, however, signal that the Trump Administration wants to free itself from unfair, illegal and ill-advised policies it inherited and take a fresh look at Fannie and Freddie and housing finance reform.
AUGUSTA, Maine — The state’s real estate continues to increase in value, despite a decline in sales last month, according to the Maine Association of Realtors.
Maine Listings reported a 12.5 percent jump in home prices, bringing the statewide median sales price to $180,000 during February. The median sales price indicates that half of the homes were sold for more and half sold for less.
Weather certainly affected buyers last month and sales eased 12.91 percent, according to the Realtors.
“The February 2017 data was impacted by a 10-day period of record-breaking snow and a comparison to a leap year in 2016, adding an extra day of sales back then,” said Greg Gosselin, broker-owner of Gosselin Realty Group and president of the Maine Association of Realtors. “However, the rolling quarter statistics indicate continuing strong real estate sales and value trends throughout Maine.”
In the rolling quarter covering December 2016 through February, York County saw 554 sales, a 2.3 percent decline from the 567 sales seen last year’s corresponding quarter. The median sales price for the most recent quarter was $244,000, up 13.5 percent from the $215,000 seen last year.
In Cumberland, the state’s largest county, there were 744 sales in the December 2016 through February rolling quarter, a 3.6 percent decline from the 772 sales seen last year’s corresponding quarter. The median sales price for the most recent quarter was $262,000, up 8.9 percent from the $240,500 seen last year.
Prices boomed in Somerset County in the most recent quarter, as 93 sales produced a median sales price of $110,000, up 57 percent from the median sales price of the corresponding quarter a year ago. Prices also jumped in Aroostook County as 100 sales in the most recent quarter produced a median sales price of $92,250, up 32.3 percent from a year ago.
“Homes are entering the spring for-sale inventory on a daily basis, Gosselin said. “Realtors are reporting that pre-qualified, credit-worthy buyers are actively searching now to take advantage of the long-term affordability and tax benefits that home ownership provides.”
According to the National Association of Realtors, sales of single-family homes nationwide rose 5.8 percent over the past year. The national median sales price of $229,900 represents a 7.6 percent jump. Regionally, single-family existing home sales in the Northeastern U.S. increased 1.5 percent while values were up 4.1 percent to $250,200.
In this Monday, Feb. 27, 2017, photo, real estate signs mark the lots near one of the new homes for sale in a development for new homes in Cranberry Township, Butler County, Pa. Americans retreated from buying existing homes in February, a pullback after sales in January had surged to the fastest pace in a decade, according to information released Wednesday, March 22, 2017, by the National Association of Realtors. Over the past 12 months, sales are up solidly. less
Photo: Keith Srakocic, AP
WASHINGTON (AP) — Americans retreated from buying existing homes in February, a pullback after sales in January had surged to the fastest pace in a decade. But over the past 12 months, sales are up solidly.
Sales of existing homes fell 3.7 percent last month to a seasonally adjusted annual rate of 5.48 million, the National Association of Realtors said Wednesday. The decline may represent just a temporary slump after the sharp sales increase in January.
Stable hiring and a recovering economy have fueled greater demand among homebuyers. Over the past year, purchases have risen 5.4 percent. At the same time, sales growth has been restricted by a shortage of homes on the market.
“The underlying story is still very positive for the housing market,” said Jennifer Lee, a senior economist at BMO Capital Markets. “The February drop is just a blip in the overall trend.”
The limited inventory and risks of rising mortgage rates may actually cause the spring home-buying season to begin with a sprint this month. Unlike last year when average 30-year mortgage rates held below 4 percent, buyers may this year feel forced to act swiftly before even higher loan rates and prices make home ownership less affordable.
The number of listings for sale has tumbled 6.4 percent over the past year to 1.75 million homes, a figure only slightly higher than in January when listings declined to the lowest level since the Realtors began tracking the data in 1999.
The supply of homes for sale has fallen on an annual basis for the past 21 months. With inventories squeezed, home values have been rising at levels that are putting greater financial pressure on would-be buyers.
The median sales price has risen 7.7 percent from a year ago to $228,400, more than double the pace of average wage gains.
Lower mortgage rates had eased some of that pressure last year. But the average 30-year fixed rate mortgage carried an interest rate of 4.3 percent last week, up from an average of 3.65 percent last year, according to mortgage buyer Freddie Mac.
In February, sales of existing homes slumped in the Northeast, Midwest and West, while the South eked out a slight gain.
WASHINGTON, March 22, 2017 /PRNewswire/ — After starting the year at the fastest pace in almost a decade, existing-home sales slid in February but remained above year ago levels both nationally and in all major 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, retreated 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January. Despite last month’s decline, February’s sales pace is still 5.4 percent above a year ago.
Lawrence Yun, NAR chief economist, says closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
Added Yun, “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”
The median existing-home price2 for all housing types in February was $228,400, up 7.7 percent from February 2016 ($212,100). February’s price increase was the fastest since last January (8.1 percent) and marks the 60th consecutive month of year-over-year gains.
Total housing inventory3 at the end of February increased 4.2 percent to 1.75 million existing homes available for sale, but is still 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).
All-cash sales were 27 percent of transactions in February (matching the highest since November 2015), up from 23 percent in January and 25 percent a year ago. Individual investors, who account for many cash sales, purchased 17 percent of homes in February, up from 15 percent in January but down from 18 percent a year ago. Seventy-one percent of investors paid in cash in February (matching highest since April 2015).
First-time buyers were 32 percent of sales in February, which is down from 33 percent in January but up from 30 percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35 percent.
“The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” said Yun. “Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched up in February to 4.17 percent from 4.15 percent in January. The average commitment rate for all of 2016 was 3.65 percent.
Properties typically stayed on the market for 45 days in February, down from 50 days in January and considerably more than a year ago (59 days). Short sales were on the market the longest at a median of 214 days in February, while foreclosures sold in 49 days and non-distressed homes took 45 days. Forty-two percent of homes sold in February were on the market for less than a month.
Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in February were San Jose–Sunnyvale–Santa Clara, Calif., 23 days; San Francisco–Oakland–Hayward, Calif., 27 days; Vallejo–Fairfield, Calif., 33 days; Seattle–Tacoma–Bellevue, Wash., 36 days; and Boulder, Colo., at 37 days.
NAR President William E. Brown, a Realtor® from Alamo, California, says being fully prepared is the right strategy for prospective buyers this spring. “Seek a preapproval from a lender, know what your budget is and begin discussions with a Realtor® early on about your housing wants and needs,” he said. “Homes in many areas are selling faster than they were last spring. A buyer’s idea of a dream home in a popular neighborhood is probably the same as many others. That’s why they’ll likely have to decide quickly if they see something they like and can afford.”
Distressed sales5 – foreclosures and short sales – were 7 percent of sales for the third straight month in February, and are down from 10 percent a year ago. Six percent of February sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in February (14 percent in January), while short sales were discounted 17 percent (10 percent in January).
Single-family and Condo/Co-op Sales
Single-family home sales declined 3.0 percent to a seasonally adjusted annual rate of 4.89 million in February from 5.04 million in January, and are now 5.8 percent above the 4.62 million pace a year ago. The median existing single-family home price was $229,900 in February, up 7.6 percent from February 2016.
Existing condominium and co-op sales descended 9.2 percent to a seasonally adjusted annual rate of 590,000 units in February, but are still 1.7 percent higher than a year ago. The median existing condo price was $216,100 in February, which is 8.2 percent above a year ago.
February existing-home sales in the Northeast slumped 13.8 percent to an annual rate of 690,000, but are still 1.5 percent above a year ago. The median price in the Northeast was $250,200, which is 4.1 percent above February 2016.
In the Midwest, existing-home sales fell 7.0 percent to an annual rate of 1.20 million in February, but are still 2.6 percent above a year ago. The median price in the Midwest was $171,700, up 6.1 percent from a year ago.
Existing-home sales in the South in January rose 1.3 percent to an annual rate of 2.34 million, and are now 5.9 percent above February 2016. The median price in the South was $205,300, up 9.6 percent from a year ago.
Existing-home sales in the West decreased 3.1 percent to an annual rate of 1.25 million in February, but are 9.6 percent above a year ago. The median price in the West was $339,900, up 9.6 percent from February 2016.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.
Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.
2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.
The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors®Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.
5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.
NOTE: NAR’s Pending Home Sales Index for February is scheduled for release on March 29, and Existing-Home Sales for March will be released April 21; release times are 10:00 a.m. ET.
Information about NAR is available at www.nar.realtor. This and other news releases are posted in the “News, Blogs and Videos” tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/existing-home-sales-stumble-in-february-300427715.html
SOURCE National Association of Realtors