Tag Archives: Home Sales

Existing Home Sales Suffer Worst Losing Streak Since 2014, Price Hits Record High

Following last month’s disappointing starts/permits data and home sales prints, hope was high for a June rebound but they are gravely disappointed. Existing home sales tumbled 0.6% MoM (vs expectations of a 0.2% rise) and even worse, it’s off a downwardly revised May print of 0.7% MoM, with median home price hitting a record high $276k.

This is the first 3-in-a-row decline for existing home sales since Jan 2014…

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Existing Home Sales SAAR is almost at its weakest since Jan 2016…

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Lawrence Yun, NAR chief economist, says closings inched backwards in June and fell on an annual basis for the fourth straight month.

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“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” he said.

“The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”

The median existing-home price for all housing types in June was $276,900, surpassing last month as the new all-time high and up 5.2% from June 2017 ($263,300). June’s price increase marks the 76th straight month of year-over-year gains.

Homebuilder stocks have generally drifted lower with the dismal data but have yet to take the next leg lower…

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Source: ZeroHedge

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Case-Shiller Home Prices Rise At Fastest Pace In 4 Years To New Record High

Thanks to a modest downward revision in February’s print, March’s Case-Shiller 20-City Composite Home Price Index rose at 6.79% YoY – the fastest price appreciation since June 2014.

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Surpassing July 2006’s record high…

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Broadening out from the 20-City composite, the national home-price gauge climbed 6.5% YoY, matching February’s YoY advance that was the biggest since May 2014.

Of course, since March, interest rates have spiked and along with them mortgage rates, plunging mortgage apps, and as property-price appreciation continues to outpace worker pay (by 3.8 times!), it is proving a disadvantage for younger or first-time buyers even as it means rising homeowner equity for others.

“Months-supply, which combines inventory levels and sales, is currently at 3.8 months, lower than the levels of the 1990s, before the housing boom and bust,” – David Blitzer, chairman of the S&P index committee, said in a statement –

“Until inventories increase faster than sales, or the economy slows significantly, home prices are likely to continue rising.”

All 20 cities in the index showed year-over-year gains, led by a 13 percent increase in Seattle, a 12.4 percent advance in Las Vegas and 11.3 percent pickup in San Francisco.

Source: ZeroHedge

Highest Mortgage Rates In 8 Years Unleash Bidding Wars, Home Buying Frenzy

Yesterday when looking at the latest MBA Mortgage Application data, we found that, as mortgage rates jumped to the highest level since 2011, mortgage refi applications, not unexpectedly tumbled to the lowest level since the financial crisis, choking off a key revenue item for banks, and resulting in even more pain for the likes of Wells Fargo.

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Today, according to the latest Freddie Mac mortgage rates report, after plateauing in recent weeks, mortgage rates reversed course and reached a new high last seen eight years ago as the 30-year fixed mortgage rate edged up to 4.61% matching the highest level since May 19, 2011.

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But while the highest mortgage rates in 8 years are predictably crushing mortgage refinance activity, they appears to be having the opposite effect on home purchases, where there is a sheer scramble to buy, and sell, houses. As Bloomberg notes, citing brokerage Redfin, the average home across the US that sold last month went into contract after a median of 36 only days on the market – a record speed in data going back to 2010.

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To Sam Khater, chief economist of Freddie Mac, this was a sign of an economy firing on all cylinders: “This is what happens when the economy is strong,” Khater told Bloomberg in a phone interview. “All the higher-rate environment does is it either causes them to try and rush or look at different properties that are more affordable.”

Of course, one can simply counter that what rising rates rally do is make housing – for those who need a mortgage – increasingly more unaffordable, as a result of the higher monthly mortgage payments. Case in point: with this week’s jump, the monthly payment on a $300,000, 30-year loan has climbed to $1,540, up over $100 from $1,424 in the beginning of the year, when the average rate was 3.95%.

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As such, surging rates merely pulls home demand from the future, as potential home buyers hope to lock in “lower” rates today instead of risking tomorrow’s rates. It also means that after today’s surge in activity, a vacuum in transactions will follow, especially if rates stabilize or happen to drop. Think “cash for clunkers”, only in this case it’s houses.

Meanwhile, the short supply of home listings for sale and increased competition is only making their purchases harder to afford: according to Redfin, this spike in demand and subdued supply means that home prices soared 7.6% in April from a year earlier to a median of $302,200, and sellers got a record 98.8% of what they asked on average.

Call it the sellers market.

Furthermore, bidding wars are increasingly breaking out: Minneapolis realtor Mary Sommerfeld said a family she works with offered $33,000 more than the $430,000 list price for a home in St. Paul. The listing agent gave her the bad news: There were nine offers and the family’s was second from the bottom.

For Sommerfeld’s clients, the lack of inventory is a bigger problem than rising mortgage rates. If anything, they want to close quickly before they get priced out of the market — and have to pay more interest.

“I don’t think it’s hurting the buyer demand at all,” she said. “My buyers say they better get busy and buy before the interest rates go up any further.”

Then again, in the grand scheme of things, 4.61% is still low. Kristin Wilson, a loan officer with Envoy Mortgage in Edina, Minnesota, tells customers to keep things in perspective. When she bought a house in the early 1980s, the interest on her adjustable-rate mortgage was 12 percent, she said.

“One woman actually used the phrase: ‘Rates shot up,’” Wilson said. “We’ve been spoiled after a number of years with rates hovering around 4 percent or lower.”

Of course, if the average mortgage rate in the America is ever 12% again, look for a real life recreation of Mad Max the movie in a neighborhood near you…

Source: ZeroHedge

 

Realtors Report Big Drop In Days On Market

The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions. In addition, the “Questions of the Month,” feature results of a timely aspect of the housing market.

Note: the REALTOR® Confidence Index is provided by NAR solely for use as a reference. Resale of any part of this data is prohibited without NAR’s prior written consent.

Highlights

  • Properties were typically on the market for 37 days (45 days in February 2017).
  • First-time buyers accounted for 29 percent of sales (32 percent in February 2017).
  • Cash sales made up 24 percent of sales (27 percent in February 2017).
  • REALTORS® report “low inventory” and “interest rate” as the major issues affecting transactions in February 2018.

Source: National Association Of Realtors

New Home Sales Smash Expectations: Spike To 10 Year Highs As Average Price Tops $400k For First Time

Following the bounce in exisitng home sales (albeit lower YoY), new home sales ripped back higher in October (up 6.2% vs expectations of a 6.1% drop) following a big downward revision of last month’s manic spike. This is the highest print for new home sales since Nov 2007.

The 6.2% surge is a six standard deviation beat of expectations…

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September’s 18.9% spike was revised notably lwoer to a 14.2% jump to 685k SAAR…

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This is the highest new home sales SAAR print since Nov 2007… but still has a long way to go back to ‘normal’…

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And finally, we note that the average new home sales price hit a new record high, above $400K for the first time ever – $400,200.

Source: ZeroHedge

Pending Home Sales Plunge In September To Lowest Since Jan 2015

Following September’s modest bounce in exisitng home sales, and explosion in new home sales (biggest jump in 25 years), today’s pending home sales was a huge disappointment, blowing the bounce back narrative.

Pending Home Sales tumbled 5.4% YoY…

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To its lowest since Jan 2015…

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Take your pick – is the housing ‘recovery’ good, bad, or ugly…

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Source: ZeroHedge

 

Existing Home Sales Down 1.8% In June And Why It Matters

Existing Home Sales in June Dive 1.8 Percent: Same Old Problem? Second and Third Quarter Impact?

The wind down to the end of the second quarter is not going very well. Existing home sales in June fell 1.8% to a seasonally adjusted annualized rate of 5.52 million. The Econoday consensus estimate was 5.58 million.

The slip in pending home sales was no false signal as existing home sales fell 1.8 percent in June to a lower-than-expected annualized rate of 5.520 million. Year-on-year, sales are still in the plus column but not by much, at 0.7 percent which is the lowest reading since February.

Compared to sales, prices are rich with the median of $263,800 up 6.5 percent from a year ago. Another negative for sales is supply which fell 0.5 percent in the month to 1.96 million for an on-year decline of 7.1 percent. Relative to sales, supply is at 4.3 months vs 4.2 months in May.

High prices appear to be keeping first-time buyers out of the market with the group representing 32 percent of sales vs 33 percent in May and 35 percent for all of last year.

Rising prices and thin supply, not to mention low wages, are offsetting favorable mortgage rates and holding down sales. Housing data have been up and down and unable to find convincing traction so far this year. Watch for new home sales on Wednesday where general strength is the expectation.

Existing Homes Sales Month-Over-Month and Year-Over-Year

Same Old Problem?

Mortgage News Daily says Existing Home Sales Weakness Blamed on Same Old Problem.

Existing home sales slipped in June, with the blame again placed on low levels of inventory. The decline in sales, announced on Monday by the National Association of Realtors® (NAR), was anticipated, as pending home sales have decreased in each of the previous three months, ticking down 0.8 percent in May.

NAR said sales of existing single-family houses, townhouses, condos and cooperative apartments were down 1.8 percent in June, to a seasonally adjusted annual rate of 5.52 million units, the second slowest performance of the year.

Lawrence Yun, NAR chief economist, says the pullback in existing home sales in June reflected the lull in contract activity in March, April, and May. “Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” he said. “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

The median existing-home price for all housing types in June was $263,800, up 6.5 percent from June 2016 ($247,600). This is a new peak price, surpassing the record set in May. June marked the 64th straight month of year-over-year gains.

The median existing single-family home price was $266,200 in June and the median existing condo price was $245,900. Those prices reflected annual increases of 6.6 percent and 6.5 percent respectively.

The tight supply of homes continues to be reflected in short marketing period. Properties typically stayed on the market for 28 days in June, one day more than in May, but six days fewer than in June 2016. Short sales were on the market the longest at a median of 102 days in June, while foreclosures sold in 57 days and non-distressed homes took 27 days. Fifty-four percent of homes sold in June were on the market for less than a month.

“Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said NAR President William E. Brown. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.”

First-time buyers accounted for 32 percent of existing home sales in June, down from 33 percent the previous month and a year earlier, while individual investors purchased 13 percent, unchanged from a year ago.

Convoluted Logic

Supposedly buyers may have better luck because the pool of buyers is shrinking as summer winds down. Really? By that logic, if there was only one person looking there would be a 100% success rate.

Yun says “The demand for buying a home is as strong as it has been since before the Great Recession.”

Really? By what measure?

Attitudes and Price

This is not a case of inventory or strong unmet demand. Here are the real factors.

  1. The Fed re-blew the housing bubble and wages did not keep up. People cannot afford the going prices. Thus, the number of first-time buyers keeps shrinking.
  2. Millenials do not have the same attitudes towards debt, housing, and family formations as their parents.
  3. Millenials are unwilling to spend money they do not have, for a place that will keep them tied down. They would rather be mobile.

Second and Third Quarter Impact

The decline in existing home purchases portends weakness in consumer spending.

There will be fewer people painting, buying furniture, updating appliances, remodeling kitchens, adding landscaping etc. The pass through effect will be greatest in the third quarter unless there is a rebound.

By Mike “Mish” Shedlock