Tag Archives: declined

Rise in Home Sales Signifies Strengthening Market

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”

Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month.
Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.

Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.

Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.

CoreLogic Records First Drop in Home Prices in Four Months

Home prices in the U.S. slipped 0.4 percent between July and August, CoreLogic reported Thursday. It marks the first time in four months the company’s index has recorded a decline.

Mark Fleming, chief economist for CoreLogic points out that although the calendar says August, it traditionally marks the beginning of fall for the housing market and activity begins to slow down as winter approaches.

In light of that, Fleming says the slight month-over-month decline was predictable, particularly given the renewed concerns over a double-dip recession, high negative equity, and the persistent levels of shadow inventory.

Based on CoreLogic’s assessment, national home prices were down 4.4 percent in August when compared to a year earlier. This follows a decline of 4.8 percent in July 2011 compared to July 2010.

That figure includes distressed sales, such as short sales and REO transactions. Take the distress factor out, and prices are down by just 0.7 percent year-over-year.

According to Fleming, “The continued bright spot is the non-distressed segment of the market, which is only marginally lower than a year ago and continues to exhibit relative strength.”

Including distressed transactions, the peak-to-current change in CoreLogic’s national price index was -30.5 percent. That’s tracking price movement from April 2006 to August 2011.

Excluding distressed transactions, the peak-to-current change for the same period was -21.0 percent.

CoreLogic says the five states with the highest home price appreciation in August were: West Virginia (+8.6%), Wyoming (+3.6%), North Dakota (+3.5%), New York (+3.2%), and Alaska (+2.2%).

The five states with the greatest depreciation were: Nevada (-12.4%), Arizona (-10.7%), Illinois (-9.6%), Minnesota (-7.8%), and Georgia (-7.2%).

Carrie Bay | DSNews.com | October 6, 2011