Existing Sales Rebound

Existing home sales rebounded from the winter quarter with the highest monthly increase in almost three years, boosting prospects for homebuilders. Existing home sales increased 4.9% in May, although that rally still left existing sales 5.0% below the same period a year ago. The National Association of Realtors (NAR) reported May 2014 total existing home sales at a seasonally adjusted rate of 4.89 million units combined for single-family homes, townhomes, condominiums and co-ops, up from 4.66 million units in April.

All four regions increased from the previous month, ranging from an 8.7% increase in the Midwest to 0.9% in the West. All four regions were down from the same period a year ago, ranging from a 0.5% decrease in the South to an 11.4% decrease in the West. Seasonally adjusted condominium and co-op sales remained unchanged both from last month and the same period a year ago.

The bad news is that the first-time buyer share dropped to only 27%, down from 29% in April and May 2013. The historical average first-time buyer share is about 40%. Tight lending conditions continue to buffet first-time buyers despite reports of easing standards, and a full recovery awaits their return.

Total housing inventory increased 2.2% in May to 2.29 million existing homes. At the current sales rate, the May 2014 inventory represents a 5.6-month supply, down from a 5.7-month supply in April and down from a 6.0-month supply a year ago. NAR also reported that the April median time on market for all homes was 47 days, down from 48 days in April but up from 41 days during the same month a year ago. NAR reported that 41% of homes sold in May were on the market less than a month, unchanged from last month.

There were further signs that the market is being embraced by home buyers. The share of distressed sales dropped to 11% in May compared to 18% in May 2013. Distressed sales are defined as foreclosures and short sales sold at deep discounts. All cash sales comprised 32% of May transactions, unchanged from April and down from 33% during the same period a year ago. Individual investors purchased a 16% share in May, down from 18% in April and 18% during the same period a year ago. Some 68% of May investors paid cash, down from 71% last month.

The May median sales price for existing homes of all types increased to $213,400 from $201,500 last month and is 5.1% above the May 2013 level. The median condominium/co-op price increased again to $212,300 in May, up from $205,500 in April, and is up 6.6% from May 2013.

The Pending Home Sales Index increased 3.2% in March and posted another slight increase in April. Therefore, May existing home sales were expected to increase from the very slow start at the beginning of the year. Higher existing home prices are making homes less appealing for investors. The increased inventory of existing homes coupled with increased new home construction will expand choices for first-time buyers, the missing link in this housing recovery.

This existing home sales report boosts prospects for homebuilders. May new home sales will be reported tomorrow.

Existing Sales and Inventory Increase

Existing home sales increased 1.3% in April, but fell 6.8% from the same period a year ago. The National Association of Realtors (NAR) reported April 2014 total existing home sales at a seasonally adjusted rate of 4.65 million units combined for single-family homes, townhomes, condominiums and co-ops, up from 4.59 million units in March.

The West and South increased by 4.9% and 1.0% respectively in April, the Northeast remained unchanged, and the Midwest decreased 1.0% from the previous month. Year-over-year, all regions decreased, ranging from a 3.5% drop in the South to a 10.0% decrease in the West. Seasonally adjusted condominium and co-op sales increased 7.3% in April, and were unchanged from the same period a year ago.

First-time buyers comprised 29% of April 2014 sales, down from 30% in March and were unchanged from last April. The January first-time buyer share of 26% was the lowest since NAR began reporting that share monthly in October 2008. The historical average first-time buyer share is about 40%. Tight lending conditions continue to buffet first-time buyers despite reports of easing standards.

Total housing inventory leaped 16.8% in April to 2.29 million existing homes. At the current sales rate, the April 2014 inventory represents a 5.9-month supply, up from a 5.1-month supply in March and up from a 5.2-month supply a year ago. Continuing a positive note, NAR also reported that the April median time on market for all homes was 48 days, down from 55 days in March but up from 43 days during the same month a year ago. NAR reported that 41% of homes sold in April were on the market less than a month, compared to 37% of all homes sold in March.

The share of distressed sales ticked up to 15% in April from 14% in March, but was down from 18% in April 2013. Distressed sales are defined as foreclosures and short sales sold at deep discounts. All cash sales comprised 32% of April transactions, down from 33% in March, and unchanged from the same period a year ago. Individual investors purchased an 18% share in April, up from 17% in March but down from 19% during the same period a year ago. Some 70% of April investors paid cash, virtually unchanged from 71% last month.

The April median sales price for existing homes of all types increased to $201,700 from the downwardly revised March median sales price of $196,700 and was up 5.2% from a year ago. The median condominium/co-op price increased again to $205,500 in April, up from a downwardly revised $198,300 in March and was up 8.3% from April 2013.

The Pending Home Sales Index increased 3.4% in March, the first increase since June 2013. Therefore, it was expected that April existing home sales would respond with a modest increase. Despite the slight increase in the April investor share, higher existing home prices make these homes less appealing for investors, and a future withdrawal of that demand will take some steam out of existing sales. The increased inventory of existing homes coupled with increased new home construction will expand choices for first-time buyers, the missing link in this housing recovery.

While existing home sales struggled through a sub-par first quarter, new home sales continue to post year-over-year gains (also tempered by recent weather impacts) as investor activity cools. The April new home sales numbers will be released tomorrow.

Existing Sales Remain Flat

Existing home sales decreased 0.2% in March, and fell 7.5% from the same period a year ago. The National Association of Realtors (NAR) reported March 2014 total existing home sales at a seasonally adjusted rate of 4.59 million units combined for single-family homes, townhomes, condominiums and co-ops, down from 4.60 million units in February.

The Northeast and Midwest increased by 9.1% and 4.0% respectively from February, while the South and West decreased 3.0% and 3.7% respectively. Year-over-year, all regions decreased, ranging from a 3.0% drop in the South to a 13.4% decrease in the West. Seasonally adjusted condominium and co-op sales fell 1.8% in March, and were down 8.3% from the same period a year ago.

First-time buyers comprised 30% of March 2014 sales, up from 28% in February and were unchanged from last March. The January first-time buyer share of 26% was the lowest since NAR began reporting that share monthly in October 2008. The historical average first-time buyer share is about 40%. Tight lending conditions continue to buffet first-time buyers and NAR points to high levels of student debt and tight inventory in the lower price ranges as important factors.

Total housing inventory increased 4.7% in March to 1.99 million existing homes. At the current sales rate, the March 2014 inventory represents a 5.2-month supply, up from a 5.0-month supply in February and up from a 4.7-month supply a year ago. On a positive note, NAR also reported that the March median time on market for all homes was 55 days, down from 62 days in February and 62 days during the same month a year ago. NAR reported that 37% of homes sold in March were on the market less than a month, compared to 34% of all homes sold in February.

As the market cures, the share of distressed sales decreased to 14% of March sales, down from 16% in February and 21% a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. All cash sales comprised 33% of March transactions, down from 35% in February, but up from 30% the same period a year ago. Individual investors purchased a 17% share in March, down from 21% in February and 19% a year ago. Some 71% of March investors paid cash, up from 73% last month.

The median sales price for existing homes of all types increased to $198,500 in March from a downwardly revised $188,300 in February, and was up 7.9% from a year ago. The median condominium/co-op price soared to $200,800 in March, up from a revised $185,100 in February and was up 11.6% from March 2013.

The Pending Home Sales Index fell 0.8% in February to the lowest level since October 2011. Therefore, it was expected that March existing home sales would remain flat. The decline in the March investor share suggests that the continued run up of existing home prices will eventually make these homes less appealing for investors, and a future withdrawal of that demand will further depress existing sales. NAR continues to make the point that increased new home construction will free up existing inventory for first-time buyers.

While existing home sales are down year-over-year, new home sales continue to post year-over-year gains (tempered by recent weather impacts) as investor activity cools. The new home sales numbers will be released tomorrow.

Existing Sales Flat

Existing home sales decreased 0.4% in February, and fell 7.1% from the same period a year ago. The National Association of Realtors (NAR) reported February 2014 total existing home sales at a seasonally adjusted rate of 4.60 million units combined for single-family homes, townhomes, condominiums and co-ops, down from 4.62 million units in January.

The West and South increased by 5.9% and 1.5% respectively from January, while the Midwest and Northeast decreased 3.8% and 11.3% respectively. Year-over-year, all regions decreased, ranging from a slight 0.5% in the South to 12.7% in the Northeast. Seasonally adjusted condominium and co-op sales fell 1.8% in February, and were down 8.2% from the same period a year ago.

First-time buyers comprised 28% of February 2014 sales, up from 26% in January, but down from 30% last February. The January first-time buyer share of 26% was the lowest since NAR began reporting that share monthly in October 2008. The historical average first-time buyer share is about 40%. Tight lending conditions continue to buffet first-time buyers, and NAR points to high levels of student debt as an important factor.

Total housing inventory increased 6.4% in February to 2.0 million existing homes. At the current sales rate, the February 2014 inventory represents a 5.2-month supply compared to a 4.9-month supply in January, and a 4.6-month supply of homes a year ago. On a positive note, NAR also reported that the February median time on market for all homes was 62 days, down from 67 days in January and 74 days during the same month a year ago. NAR reported that 34% of homes sold in February were on the market less than a month, compared to 31% of all homes sold in January.

As the market heals, the share of distressed sales increased for a second consecutive month to 16% in February from 15% in January, but was down from 25% a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. All cash sales were 35% of February transactions, up from 33% in January and 32% the same period a year ago. Individual investors purchased a 21% share in February, down from 20% in January and 22% a year ago. Some 73% of February investors paid cash, up from 70% last month.

The median sales price for existing homes of all types increased to $189,000 in February from a downwardly revised $187,900 in January, but was up 9.1% from a year ago. The median condominium/co-op price was $187,900 in February, down from a revised $187,900 in January, but up 9.8% from February 2013.

The December Pending Home Sales Index fell sharply by 8.7% in December, and then ticked up a tiny 0.1% in January. With much of the decrease attributed to weather, it was expected that January and February existing home sales would also fall sharply. Despite the increase in the February investor share, the 2013 run up of existing home prices will eventually make these homes less appealing for investors, and a future withdrawal of that demand will further depress existing sales. While existing home sales are down year-over-year, new home sales continue to post year-over-year gains (tempered by recent weather impacts) as investor activity cools. January 2014 new home sales hit a seasonally adjusted rate of 468,000 which was up from 458,000 during the same month a year ago.

Last month NAR reported that higher flood insurance rates presented a new headwind for just under a tenth of the market, and that 40,000 home sales were either cancelled or delayed because of higher flood insurance rates. NAHB applauds the Senate for joining the House by passing H.R. 3370, the Homeowner Flood Insurance Affordability Act, which will moderate the immediate impact of flood insurance premiums on home owners.

Existing Sales Tumble

Existing home sales decreased 5.1% in January, and decreased 5.1% from the same period a year ago. The National Association of Realtors (NAR) reported January 2014 total existing home sales at a seasonally adjusted rate of 4.62 million units combined for single-family homes, townhomes, condominiums and co-ops, down from a 4.87 million units in December.

The slide occurred in every region. Year over year, only the South reported a slight 1.6% increase from January 2013. Seasonally adjusted condominium and co-op sales remained flat in January, and were up 1.8% for the year.

First-time buyers comprised 26% of January 2014 sales, down from 27% in December and 30% for the same period a year ago. The January first-time buyer share was the lowest since NAR began reporting that share monthly in October 2008. The historical average first-time buyer share is about 40%.

Total housing inventory increased 2.2% in January to 1.90 million existing homes. At the current sales rate, the January 2014 inventory represents a 4.9-month supply compared to a 4.6-month supply in December, and a 4.4-month supply of homes a year ago. NAR also reported that the January median time on market for all homes was 67 days, down from 72 days in December and 71 days during the same month a year ago. NAR reported that 31% of homes sold in January were on the market less than a month, compared to 28% of all homes sold in December.

The share of distressed sales increased for the first time in five months to 15% of sales in January, up from 14% in December and 24% a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts. All cash sales were 33% of January transactions, up from 32% in December and 28% the same period a year ago. Individual investors purchased a 20% share in January, down from 21% in December and 19% a year ago. About 70% of January investors paid cash.

The median sales price for existing homes of all types fell to $188,900 in January from $197,700 in December, but was up 10.7% from a year ago. The median condominium/co-op price was $188,700 in January, down from $197,600 in December, but up 13.0% from January 2013.

The December Pending Home Sales Index fell sharply by 8.7% in December. With much of the decrease attributed to weather, it was expected that January existing home sales would also fall sharply. However, NAR reported that higher flood insurance rates presented a new headwind for just under a tenth of the market, and that 40,000 home sales were either cancelled or delayed because of higher flood insurance rates. NAHB is actively addressing this problem by supporting H.R. 3370, the Homeowner Flood Insurance Affordability Act, which would provide certainty and financial stability to the National Flood Insurance Program.

Existing Sales Increase

Existing home sales increased 1.0% in December, but were down 0.6% from December 2012. The National Association of Realtors (NAR) reported December 2013 total existing home sales at a seasonally adjusted rate of 4.87 million units combined for single-family homes, townhomes, condominiums and co-ops, up from a downwardly adjusted 4.82 million units in November.

Existing home sales in the West and South increased 4.8% and 3.0% respectively in December, while in the Northeast and Midwest existing home sales decreased 1.5% and 4.3% respectively. Compared to last December, the South and Northeast increased 4.6% and 3.2% respectively. Existing home sales decreased in the Midwest and West by 0.9% and 10.7% respectively from the same month a year ago.

The December 2013 level of single-family existing sales increased 1.9% to a seasonally adjusted 4.30 million sales, but were down 0.7% from the same month a year ago. Seasonally adjusted condominium and co-op sales decreased 5.0% in December to a seasonally adjusted 570,000 units, and were unchanged from the same period a year ago.

The total housing inventory decreased 9.3% in December to 1.86 million existing homes. At the current sales rate, the December 2013 inventory represents a 4.6-month supply compared to a 5.1-month supply in November, and a 4.5 -month supply of homes a year ago. NAR also reported that the December median time on market for all homes was 72 days, up from 56 days in November but down from 73 days during the same month a year ago. NAR reported that 28% of all homes sold in December were on the market less than a month, compared to 35% in November.

The share of distressed sales in December held steady for the fourth straight month at 14%, compared to 24% for the same period a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts.

After decreasing for four months, the median sales price for existing homes of all types was $198,000 in December, up from a revised $195,500 in November and up 9.9% from December 2012. Compared to a year ago, median sales prices increased in all four regions, ranging from 16.0% in the West to 3.6% in the Northeast. The median condominium/co-op price was $198,600 in December, up 10.9% from December 2012.

In December 2013, all cash sales were 32% of transactions, the same as in November, but were up from 29% in December 2012. Investors accounted for 21% of December 2013 home sales, up from 19% in November and the same level as a year ago. The all cash sale share and investor share appear to represent a steady portion of the existing home sales market. First-time buyers accounted for 27% of December 2013 sales, down from 28% in November and 30% in December 2012, and remain well below the historical average of about 40%.

The November Pending Home Sales Index ticked up 0.2% in November, so it was anticipated that existing home sales would increase moderately. As mortgage rates remain steady, a long-term trend of increasing existing home sales will continue.

Existing Sales Down

November existing home sales decreased from October to a level below the same period a year ago. Existing home sales decreased 4.3% in November, and were down 1.2% from November 2012. The National Association of Realtors (NAR) reported November 2013 total existing home sales at a seasonally adjusted rate of 4.9 million units combined for single-family homes, townhomes, condominiums and co-ops, down from 5.12 million units in October.

All regions declined in November, ranging from an 8.5% decrease in the West to a 2.4% decrease in the South. Compared to the same period a year ago, existing sales in the Northeast and South increased 6.6% and 1.0% respectively. The Midwest was unchanged, while existing home sales the West decreased 10.1% from November 2012.

The November 2013 level of single-family existing sales fell 3.8% to a seasonally adjusted 4.32 million sales, and were down 0.9% from the same month a year ago. Seasonally adjusted condominium and co-op sales decreased 7.9% in November to a seasonally adjusted 580,000 units, and were down 3.3% from the same period a year ago.

The total housing inventory decreased 0.9% in November to 2.09 million existing homes. At the current sales rate, the November 2013 inventory represents a 5.1-month supply compared to a 4.9-month supply in October, and a 4.8-month supply of homes a year ago. NAR also reported that the November median time on market for all homes was 56 days, up from 54 days in October but down from 70 days during the same month a year ago. NAR reported that 35% of all homes sold in November were on the market less than a month, compared to 36% in October.

The share of distressed sales in November held steady for the third straight month at 14%, compared to 22% for the same period a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts.

The median sales price for existing homes of all types was $196,300 in November, down for the fifth straight month, but up 9.4% from the same month a year ago. Compared to a year ago, median sales prices increased in all four regions, ranging from 16.5% in the West to 5.7% in the Northeast. The median condominium/co-op price increased slightly to $197,400 in November from a downwardly revised $196,500 in October, and was up 10.0% from the same period a year ago.

In November 2013, all cash sales were 32% of transactions compared to 31% in October, and 30% in November 2012. For the third consecutive month, investors accounted for 19% of November 2013 home sales, the same level as a year ago. For the third consecutive month, first-time buyers accounted for 28% of November 2013 sales, unchanged from October, but down from 30% during the same month a year ago and well below the historical average of about 40%.

Based on the 0.6% drop in the October Pending Home Sales Index, it was expected that existing home sales would decline. In October, NAR chief economist Lawrence Yun asserted: “More new home construction is needed to help relieve the inventory pressure and moderate price gains.” That call was met by a string of excellent reports from the new residential construction sector including a 25.4% increase in October new home sales, a 4 point December increase in the NAHB/Wells Fargo Housing Market Index to 58 and a 22.7% increase in November total housing starts. A higher share of new home buyers are trade-up buyers and higher income households, and were financially better prepared to overcome the increase in mortgage rates earlier this year. After a continuing period of adjustment over the next few months, the long-term trend of increasing existing home sales will continue.

Existing Sales Decline

Existing home sales decreased 3.2% in October, but were up 6.0% from the same period a year ago. The National Association of Realtors (NAR) reported October 2013 total existing home sales at a seasonally adjusted rate of 5.12 million units combined for single-family homes, townhomes, condominiums and co-ops, down from a revised September level of 5.29 million units.

All regions declined from September levels, and the West had the largest decrease at 7.1%. The West was the only region that was also down from the same period a year ago, with a slight 0.8% decrease. The Northeast was up 11.7% from a year ago, followed by the Midwest which was up 8.0% from last October and the South which was up 7.3% from the same month a year ago.

The October 2013 level of single-family existing sales fell 4.1% from September to a seasonally adjusted 4.49 million sales, but was up 5.2% from the same month a year ago. Seasonally adjusted condominium and co-op sales were up 3.3% in October to a seasonally adjusted 630,000 units, and were up 12.5% from the same period a year ago.

Due to seasonal declines, the total housing inventory decreased 1.8% in October to 2.13 million existing homes. At the current sales rate, the October 2013 inventory represents a 5.0-month supply compared to a 4.9-month supply in September, and a 5.2-month supply of homes a year ago. NAR also reported that the October median time on market for all homes was 54 days, up from 50 days in September but down from 71 days during the same month a year ago. NAR reported that 36% of all homes sold in October were on the market less than a month, marking a slower pace from 39% in September.

The share of distressed sales held steady at 14% in October, compared to 25% for the same period a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts.

The median sales price for existing homes of all types was $199,500 in October, up slightly for the first time in four months from a revised $198,500 in September. The October median sales price was up 12.8% from the same period a year ago. Compared to a year ago, median sales prices increased 17.2% in the West, 12.9% in the South, 9.3% in the Midwest and 7.4% in the Northeast. The median condominium/co-op price increased slightly to $199,200 in October from a revised $198,800 in September, and was up 13.1% from the same period a year ago.

In October 2013, all cash sales were 31% of transactions compared to 33% in September, and 29% in October 2012. Investors accounted for 19% of October 2013 home sales, the same as the previous month and down from 20% during the same month a year ago. First-time buyers accounted for 28% of October 2013 sales, unchanged from September, but down from 31% during October a year ago and well below the historical average of about 40%.

NAR chief economist Lawrence Yun observed the decrease in the inventory level, and asserted: “More new home construction is needed to help relieve the inventory pressure and moderate price gains.” NAR also suggested that the decrease in the distressed sale share contributed to the increase in the median price.

Monday’s NAHB/ Wells Fargo Housing Market Index remained above 50 which was encouraging given the policy and economic uncertainties potential buyers faced last month and must continue to consider. The 3.2% decline in October sales is consistent with last month’s 5.6% decrease in the Pending Home Sales Index.

After a brief surge in sales in the spring and summer, ensuing policy uncertainties and rising interest rates have dampened sales. After a period of adjustment over the next few months, the long-term trend of increasing sales will continue.

Existing Sales Decline

Existing home sales decreased 1.9% in September from a significant downward revision in August, but were up 10.7% from the same period a year ago. The National Association of Realtors (NAR) reported that September 2013 total existing home sales were at a seasonally adjusted rate of 5.29 million units combined for single-family homes, townhomes, condominiums and co-ops. The August level was 5.39 million units, downwardly revised from a previously reported 5.48 million units. The West increased 1.6% in September, while the Midwest, Northeast and South decreased 5.3%, 2.8% and 1.4% respectively. All regions were up from a year ago: 15.0% in the Northeast, 12.6% in the Midwest, 9.9% in the South and 7.8% in the West.

Existing Home Sales September 2013
The September 2013 level of single-family existing sales fell 1.5% to a seasonally adjusted 4.68 million sales from a downwardly revised August level, but was up 10.9% from the same month a year ago. Seasonally adjusted condominium and co-op sales were down 4.7% in September to a seasonally adjusted 610,000 units, and were up 8.9% from the same period a year ago.

The total housing inventory remained unchanged in September from the previous month at 2.21 million existing homes for sale. At the current sales rate, the September 2013 inventory represents a 5.0-month supply compared to a 4.9-month supply in August, and a 5.4-month supply of homes a year ago. NAR also reported that the September median time on market for all homes was 50 days, up from 43 days in August but down from 70 days during the same month a year ago. NAR reported that 39% of all homes sold in September were on the market less than a month, marking a slower pace from 43% in August.

The share of distressed sales increased to 14% in September, up from 12% in August which was the lowest level since NAR initiated monthly tracking in October 2008. The September distressed share was down from 24% a year ago. Distressed sales are defined as foreclosures and short sales sold at deep discounts.

The median sales price for existing homes of all types was $199,200 in September, down for a third consecutive month and down from $209,700 in August (revised down from a previously reported $212,100). The September median sales price was up 11.7% from the same period a year ago. Compared to a year ago, median sales prices increased 16.8% in the West, 13.9% in the South, 9.0% in the Midwest and 2.3% in the Northeast. The median condominium/co-op price decreased to $198,600 in September from $209,600 in August, but was up 14.2% from the same period a year ago. .

In September 2013, all cash sales were 33% of transactions compared to 32% in August, and 28% in September 2012. Investors accounted for 19% of September 2013 home sales, compared to 17% in August and 18% during the same month a year ago. First-time buyers accounted for 28% of September 2013 sales, unchanged from August and well below the historical average of about 40%.

NAR stated that the rise in mortgage rates lowered affordability; however income growth and improved employment rates will determine how quickly and to what extent first-time buyers enter the market. Last week’s drop in the NAHB Wells Fargo Housing Market Index suggested challenges for the new construction market as well. The 1.9% decline in September sales is consistent with last month’s 1.6% decrease in the Pending Home Sales Index. NAR expects that sales were also hurt by the government shutdown, and that impact will be reported next month.

Pending Home Sales in April – Continuing Progress

The National Association of Realtors (NAR) released their pending home sales index (PHSI) for April. The PHSI tracks sales contracts signed, the precursor to contracts being closed, and is typically a good predictor of existing homes sales (i.e., contract closings) in the following month or two.

The PHSI advanced 0.3% in April from March and stands 10.3% higher than in April of 2012. The continuing advance in contracts signed in April suggests sales in May will continue their climb.

After hitting bottom at an annual pace of roughly 3.5 million sales in July 2010 following the expiration of the home buyer tax credit, existing home sales have recovered, reaching a pace of nearly 5.0 million in April. As the housing market continues to improve, we expect the pace of existing home sales to continue rising moderately reaching 5.2 million by the end of 2014.