Mortgage News in the Carolinas
Posts tagged Home Supply
Distressed Homes Now Selling At A 20 Percent Discount
0263 days
by Geoff Brown
in Housing Analysis
The housing market recovery stalled last month. At least temporarily.
According to the National Association of REALTORS®, Existing Home Sales slipped 1 percent in April from the month prior, falling to 5.05 million units on a seasonally-adjusted, annualized basis. The reading is exactly in-line with report’s 6-month average which also reads 5.05 million units.
The data may appear “average”, but there’s another angle to consider.
In April, as compared to March, the supply of existing homes for sales spiked. At the current pace of home sales, it would now take 9.2 months to exhaust today’s complete home inventory. This is almost one full month worse than March. It’s the worst home supply reading of the year.
There are also more homes “on the market” today than at any time since September 2010.
Other noteworthy statistics in the April Existing Home Sales report include:
- 31 percent of all homes sold in April were purchased with cash
- First-time home buyers bought 36 percent of all homes in April
- Distressed properties typically sold at a 20 percent discount
This “discount”, it should be noted, is a major reason why distressed properties accounted for 37 percent of the home resales in April. Home buyers are finding bargains when they’re willing to consider homes in various stages of foreclosure and short sale.
Overall, the April Existing Home Sales report represents opportunity for home buyers in and around Charlotte. Home sales are stagnant, supplies are rising and there’s no shortage of properties from which to choose. Furthermore, mortgage rates remain low.
If you’re considering a home purchase this fall, home supply may not be as ample, and financing conditions may not be as favorable, post-Labor Day. Talk to your real estate agent about what’s possible today. You may want to move up your time frame.
Existing Home Sales Unexpectedly Drop In February
0322 days
by Geoff Brown
in Housing Analysis
Existing Home Sales fell 10 percent last month, according to a report from the National Association of REALTORS®.
On an annual basis, 4.88 million homes were sold in February — the first time annualized home resales dropped below 5,000,000 since November 2010.
An “existing home” is one that’s not considered new construction.
And it’s not just sales volume that’s down. Home inventory is higher, too. At the current pace of sales, the number of months needed to sell the complete home resale inventory rose by 1.1 months, to 8.6 months nationally.
It’s the biggest one-month jump in supply since July 2010 — the month after last year’s federal home buyer tax credit program expired.
The data is somewhat unexpected, too. NAR’s Pending Home Sales report is a reliable predictor for the housing market and, based on recent findings, home sales were projected to climb in February. It’s unclear why they didn’t.
Regardless, the February sales data reveals an interesting breakdown by buyer-type. Notably, the percentage of first-time home buyers in the market grew by more than any other segment.
- First-time home buyers : 34% of all sales, +5% from January
- Repeat buyers : 47% of all sales, -1% from January
- Real estate investors : 19% of all sales, -4% from January
Cash buyers represented 33 percent of all sales, up 1 tick from the month prior.
For Charlotte home buyers, February’s Existing Home Sales data suggests more home supply and lower home prices this spring. However, rising mortgage rates could eliminate the monthly savings attributed to falling home values.
To get the most from your mortgage-buying dollar, lock while rates are low.
Home Inventory Dwindles Into The New Year
0411 days
Existing Home Sales jumped another 6 percent in November, the report’s third month of improvement since bottoming in July.
According to the National Association of REALTORS®, a quarter-million more existing homes were sold during the annual period ending in November as compared to October. An “existing home” is a home that cannot be considered new construction.
Additionally, the national housing supply dropped by a full month. At the current pace of existing home sales, the complete stock of homes for sale will be exhausted in 9.5 months.
November’s strong housing data is yet another signal to buyers in Charlotte that the housing market’s foundation has been rebuilt, and that a rebound is imminent. It’s helped that there are great “deals” on which for buyers to pounce.
In November, short sales and foreclosures accounted for one-third of all existing homes sold, and carried an average price discount of 10 percent and 15 percent, respectively, as compared to non-distressed sales.
Repeat buyers continue to power the market, too, representing more than half of all home buyers.
- First-time buyers : 32% of all buyers
- Investors : 19% of all buyers
- Repeat buyers : 51% of all buyers
This breakdown suggests that housing has regained its footing. First-time buyers can’t support a market long-term like repeat buyers can and, as compared to 12 months ago, the percentage of repeat buyers is now up 14 points.
Home buyers take note. Raw sales volume is rising and available inventory is dropping. Basic supply-and-demand tells us that this will lead home prices higher. Furthermore, mortgage rates are rising quickly, increasing the cost of homeownership.
If buying a home is a part of your plan for 2011, consider accelerating your purchase time frame. Existing homes account for more than 80% of homes sold nationwide. If the market keeps improving like this, your home affordability will worsen.
Pending Home Sales Data Points To Higher Home Prices This Fall
0490 days
Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May’s post-tax credit drop-off.
A “pending home” is an existing home under contract to sell, but not yet closed.
According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.
As a real-life illustration, after July’s 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July’s Pending Home Sales Index predicted it.
Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:
- Northeast : -2.9% from July
- Midwest : +2.1% from July
- South : +6.7% from July
- West : + 6.4% from July
That said, real estate markets aren’t “regional” — they’re local. Just as there are improving markets within the Northeast Region, there’s worsening markets in the West. And cities like Charlotte have their own market traits, too.
Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.
