Seasonal home sales may be slipping, but demand and prices are still over last year, according to the National Association of Realtors (NAR). NAR analysts note that sales numbers have been higher than year-ago levels for 28 consecutive months, but that a weakening in buying power combined with low inventory will contribute to moderation in the market in the near term. NAR data show that inventory is lowest in Oakland, San Jose, Stockton and San Francisco, California, along with Denver, in which real estate in all locations is on the market for 48 days or less. For more on this continue reading the following article from Property Wire.
Existing home sales in the United States declined for the second consecutive month in October but constrained inventory means that home prices continued to see double digit year on year gains.
The latest data from the National Association of Realtors shows that total existing home sales fell 3.2% to a seasonally adjusted annual rate of 5.12 million in October from 5.29 million in September, but are 6% higher than the 4.83 million unit level in October 2012.
Lawrence Yun, NAR chief economist said that sales have remained above year ago levels for the past 28 months and a flattening trend is expected. ‘The erosion in buying power is dampening home sales. Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains,’ he explained.
The national median existing home price for all housing types was $199,500 in October, up 12.8% from October 2012, which is the 11th consecutive month of double digit year on year increases.
Distressed homes, that is foreclosures and short sales, accounted for 14% of October sales, unchanged from September and well below the 25% recorded in October 2012. Part of the gain in median price is from a smaller share of distressed sales.
Some 9% of October sales were foreclosures and 5% were short sales. Foreclosures sold for an average discount of 17% below market value in October, while short sales were discounted 14%.
Total housing inventory at the end of October declined 1.8% to 2.13 million existing homes available for sale, which represents a five month supply at the current sales pace. It was 4.9 months in September. Unsold inventory is 0.9% above a year ago, when there was a 5.2 month supply.
The median time on market for all homes was 54 days in October, up from 50 days in September, but well below the 71 days on market in October 2012. Short sales were on the market for a median of 93 days, while foreclosures typically sold in 46 days, and non-distressed homes took 53 days. Some 36% of homes sold in October were on the market for less than a month.
Data from the NAR’s listing site shows the tightest inventory conditions are in Oakland, California at 30 days with San Francisco, San Jose, Denver and Stockton-Lodi all on 48 days.
NAR president Steve Brown believes that credit remains unnecessarily restrictive. ‘Although mortgage interest rates are still historically affordable, some financially qualified buyers are being denied a loan,’ he said.
‘The risk averse nature of lending also is impacting small builders who are unable to get construction loans, even when they see strong local demand. We simply have to reverse the pendulum swing back toward the middle to give more creditworthy borrowers access to safe and sound financing,’ he added.
The NAR data also shows that first time buyers accounted for 28% of purchases in October, unchanged from September, but down from 31% in October 2012, while cash sales comprised 31% of transactions in October, down from 33% in September. Individual investors, who account for many cash sales, purchased 19% of homes in October, unchanged from September.
Single family home sales fell 4.1% to a seasonally adjusted annual rate of 4.49 million in October from 4.68 million in September, but are 5.2% above the 4.27 million unit pace in October 2012. The median existing single family home price was $199,500 in October, up 12.7% from a year ago.
Existing condominium and co-op sales rose 3.3% to an annual rate of 630,000 units in October from 610,000 in September, and are 12.5% above the 560,000 unit level a year ago. The median existing condo price was $199,200 in October, which is 13.1% above October 2012.
Regionally, existing home sales in the Northeast declined 2.9% to an annual rate of 670,000 in October, but are 11.7% higher than October 2012. The median price in the Northeast was $247,300, up 7.4% from a year ago.
Existing home sales in the Midwest slipped 1.6% in October to a pace of 1.22 million, but are 8% above a year ago. The median price in the Midwest was $154,700, which is 9.3% higher than October 2012.
In the South, existing home sales declined 1.9% to an annual level of 2.06 million in October, but are 7.3% above October 2012. The median price in the South was $171,500, up 12.9% from a year ago.
With constrained inventory, existing home sales in the West fell 7.1% to a pace of 1.17 million in October, and are 0.8% below a year ago. The median price in the West was $284,800, up 17.2% from October 2012.
This article was republished with permission from Property Wire.