Pending home sales in April fell 7.7%, according to the National Association of Realtors®. All four U.S. regions registered month-over-month and year-over-year decreases.

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – decreased to 72.3 in April. Year over year, pending transactions were down 7.4%. An index of 100 is equal to the level of contract activity in 2001.

“The impact of escalating interest rates throughout April dampened home buying, even with more inventory in the market,” said NAR Chief Economist Lawrence Yun. “But the Federal Reserve’s anticipated rate cut later this year should lead to better conditions, with improved affordability and more supply.”

Pending Home Sales Regional Breakdown
The Northeast PHSI fell 3.5% from last month to 62.9, a decline of 3.1% from April 2023. The Midwest index dropped 9.5% to 70.7 in April, down 8.7% from one year ago.

The South PHSI lowered 7.6% to 88.6 in April, dropping 8.2% from the prior year. The West index decreased 8.5% in April to 55.9, down 7.3% from April 2023.

“Home prices are hitting record highs, but the pace of gains should decelerate with more supply,” said Yun. “However, the prospect of measurable home price declines appears minimal. The few markets experiencing price declines will be viewed as second-chance opportunities for buyers to enter the market if those regions continue to add jobs.”

Posted On Thursday, 30 May 2024 07:04 Written by

Existing-home sales receded in April, according to the National Association of Realtors®. All four major U.S. regions posted month-over-month declines. Year-over-year, sales decreased in the Northeast, Midwest and South but increased in the West.

Total existing-home sales[i] – completed transactions that include single-family homes, townhomes, condominiums and co-ops – slid 1.9% from March to a seasonally adjusted annual rate of 4.14 million in April. Year-over-year, sales fell 1.9% (down from 4.22 million in April 2023).

“Home sales changed little overall, but the upper-end market is experiencing a sizable gain due to more supply coming onto the market,” said NAR Chief Economist Lawrence Yun.

Total housing inventory[ii] registered at the end of April was 1.21 million units, up 9% from March and 16.3% from one year ago (1.04 million). Unsold inventory sits at a 3.5-month supply at the current sales pace, up from 3.2 months in March and 3.0 months in April 2023. For homes priced $1 million or more, inventory and sales increased by 34% and 40%, respectively, from a year ago.

The median existing-home price[iii] for all housing types in April was $407,600, an increase of 5.7% from the previous year ($385,800). All four U.S. regions registered price gains.

“Home prices reaching a record high for the month of April is very good news for homeowners,” Yun added. “However, the pace of price increases should taper off since more housing inventory is becoming available.”

REALTORS® Confidence Index

According to the monthly REALTORS® Confidence Index, properties typically remained on the market for 26 days in April, down from 33 days in March but up from 22 days in April 2023.

First-time buyers were responsible for 33% of sales in April, up from 32% in March and 29% in April 2023. NAR’s 2023 Profile of Home Buyers and Sellers – released in November 2023[iv] – found that the annual share of first-time buyers was 32%.

All-cash sales accounted for 28% of transactions in April, identical to March and one year ago.

Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in April, up from 15% in March but down from 17% in April 2023.

Distressed sales[v] – foreclosures and short sales – represented 2% of sales in April, virtually unchanged from last month and the prior year.

Mortgage Rates

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 7.02% as of May 16. That’s down from 7.09% the previous week but up from 6.39% one year ago.

Single-family and Condo/Co-op Sales

Single-family home sales decreased to a seasonally adjusted annual rate of 3.74 million in April, down 2.1% from 3.82 million in March and 1.3% from the prior year. The median existing single-family home price was $412,100 in April, up 5.6% from April 2023.

At a seasonally adjusted annual rate of 400,000 units in April, existing condominium and co-op sales were unchanged from last month and down 7% from one year ago (430,000 units). The median existing condo price was $365,300 in April, up 5.4% from the previous year ($346,700).

Regional Breakdown

Existing-home sales in the Northeast waned 4% from March to an annual rate of 480,000 in April, a decline of 4% from April 2023. The median price in the Northeast was $458,500, up 8.5% from the previous year.

In the Midwest, existing-home sales slipped 1% from one month ago to an annual rate of 1 million in April, down 1% from one year ago. The median price in the Midwest was $303,600, up 6% from April 2023.

Existing-home sales in the South descended 1.6% from March to an annual rate of 1.9 million in April, down 3.1% from the prior year. The median price in the South was $366,200, up 3.7% from last year.

In the West, existing-home sales retracted 2.6% from a month ago to an annual rate of 760,000 in April, an increase of 1.3% from one year before. The median price in the West was $629,600, up 9.3% from April 2023.

 

[i] 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 benchmarks 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% of total home sales, are based on a much larger data sample – about 40% 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.

[ii] 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% of transactions and condos were measured only on a quarterly basis).

[iii] 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.

[iv] Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s REALTORS® Confidence Index, which include all types of buyers. The annual study only represents primary residence purchases, and does not include investor and vacation home buyers. Results include both new and existing homes.

[v] 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 nar.realtor.

Posted On Wednesday, 22 May 2024 07:21 Written by

Yun discussed economic issues and trends, provided forecast at 2024 REALTORS® Legislative Meetings

National Association of Realtors® Chief Economist Lawrence Yun forecasts that interest rates will fall in the long term, 2024 existing-home sales will rise to 4.46 million (up 9% from 4.09 million in 2023) and 2025 existing-home sales will increase to 5.05 million (up 13.2% from 2024) – with further gains in eight of the next 10 years – during the “Residential Economic Issues & Trends Forum” at NAR’s 2024 REALTORS® Legislative Meetings.

Yun also explained that rents will calm down further, which will hold down the consumer price index (CPI) and make the Federal Reserve cut interest rates.

Yun said that based on April’s employment data, there are six million more jobs compared to the pre-Covid highs, and jobs are boosting home prices.

“More jobs mean more home sales and higher housing demand,” said Yun. “You need a strong local economy for a strong housing market.”

Yun discussed the wealth comparison between homeowners and renters. In 2022, the median net worth of homeowners was $396,200, while the median net worth of renters was $10,400.

“The referral business is key,” Yun told a crowd of Realtors®. “Your past clients are super happy in terms of their wealth gains. Seven percent mortgage rates are high compared to a couple of years ago, but you have to buy a home in order to build wealth. Have Americans lost the dream of homeownership? I don’t think so.”

Yun made several comparisons to 1995. The U.S. currently has 40 million more total payroll jobs and 70 million more people than in 1995. However, annual existing-home sales in 2023 experienced their worst year since 1995. So far in 2024, monthly existing-home sales rates have struggled to climb above last year’s level.

 “How is it that home sales can be this low when we’ve got so many people living in this country?” asked Yun. “High mortgage rates and lack of inventory were a shock. Over the next 10 years, probably eight of those 10 years will improve for home sales.”

Yun touched on housing inventory saying, “Not all housing demand is being satisfied, due to lack of supply. We are looking at advocacy policies to counteract that.”

“Mortgage rates are very important,” explained Yun. “The Federal Reserve has delayed rate cuts. I would have thought that, by now, rates would be lower and rate cuts would have begun. Whatever rate cut the Federal Reserve does not do this year will simply get pushed back to 2025. They’re calling for a September rate cut, but we’ll see.”

Yun discussed how the 30-year mortgage and federal funds rate are in a high-rate environment. He explained that the monthly payment for first-time home buyers – with a 10% down payment and 80% of median home price – has gone up significantly during Covid, doubling the cost.

Yun noted that homeowners are happy. According to NAR data (2023 Profile of Home Buyers and Sellers), nine out of 10 buyers (89%) relied on the services of a real estate agent or broker. Of those, there is a 90% satisfaction rate – they would use their agent again or recommend their agent to others.

Yun questioned whether the immense size of the government deficit is further pressuring rising rates. He addressed government spending: “Four years out from the start of the pandemic, the U.S. is spending money as if we’re still in the heights of Covid-19.”

“We had a massive budget deficit while experiencing a good economy, meaning low unemployment,” said Yun. “People may get used to permanently high inflation, and people will be looking for an inflation hedge. Real estate is proven.”

Posted On Tuesday, 07 May 2024 10:19 Written by

-- Key Highlights

  • Pending home sales decreased 4.9% in January.
  • Month over month, contract signings rose in the Northeast and West but fell in the Midwest and South.
  • Compared to one year ago, pending home sales declined in all U.S. regions.

Pending home sales in January dropped 4.9%, according to the National Association of Realtors®. The Northeast and West posted monthly gains in transactions while the Midwest and South recorded losses. All four U.S. regions registered year-over-year decreases.
The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – decreased to 74.3 in January. Year over year, pending transactions were down 8.8%. An index of 100 is equal to the level of contract activity in 2001.
“The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” said NAR Chief Economist Lawrence Yun. “This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.” 

Pending Home Sales Regional Breakdown
The Northeast PHSI increased 0.8% from last month to 63.6, a decline of 5.5% from January 2023. The Midwest index decreased 7.6% to 73.7 in January, down 11.6% from one year ago.
The South PHSI declined 7.3% to 88.5 in January, falling 9.0% from the prior year. The West index rose 0.5% in January to 61.1, down 7.0% from January 2023.
“Southern states and those in the Rocky Mountain time zone experienced faster job growth compared to the rest of the country,” added Yun. “As a result, long-term housing demand is increasing more significantly in these regions. However, the timing and number of purchases will largely depend on the prevailing mortgage rates and inventory availability.”

Posted On Thursday, 29 February 2024 08:28 Written by

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