Lawrence Yun Archives

December Home Sales Surge Nearly 15%

Sales of previously owned homes surged in December, according to new numbers released by the National Association of Realtors. The 14.7 percent sales spike was caused, in part, by delayed transactions that would normally have closed in November but were slowed by new mortgage disclosure rules. Regardless, Lawrence Yun, NAR’s chief economist, says the two months together show sales ended the year at a healthy pace. “While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” Yun said. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.” Totals for 2015 show existing-home sales recorded their best year since 2006 and ended the year 7.7 percent higher than at the close of 2014. Despite the strong end to the year, however, Yun says low for-sale inventory, rising mortgage rates, and tepid economic expansion may mean sales numbers will struggle to replicate this year’s gains in 2016. Also in the report, regional results found large increases in all four regions, with the West leading the way with a 23.2 percent sales improvement in December. More here.

Pending Home Sales Slow In November

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed during the month. Because it tracks signings, and not closings, it is considered a good indicator of future existing-home sales. In November, contract signings slowed from the month before but remained 2.7 percent above year-before levels. It was the 15th consecutive month pending home sales rose year-over-year. Still, the monthly trend shows sales beginning to slow. Lawrence Yun, NAR’s chief economist, says pending sales have been slowing ever since they hit a nine-year high in May. “Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains,” Yun said. “While feedback from Realtors continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.” Still, despite falling 0.9 percent in November, pending sales’ estimates from October were revised upward and regional results show contract signings were actually up in the Midwest and South. More here.

Home Sales Slip May Not Be What It Seems

Sales of previously owned homes fell in November, according to new estimates released by the National Association or Realtors. The decline put sales 3.8 percent below last November’s level, marking the first time since September 2014 that existing home sales dropped year-over-year. Despite the decline, Lawrence Yun, NAR’s chief economist, said decreasing sales may have more to do with new industry regulations than disappearing demand. “Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” Yun said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.” According to Yun, the primary reason for the sharp drop in November sales is the Know Before You Owe rule, which has led to longer closing times. In fact, 47 percent of Realtors responding to the NAR’s most recent Realtor Confidence Index said they were experiencing longer closing times compared to a year ago. If closing times have increased, a portion of the transactions that normally would’ve closed in November may now register as December sales. More here.

Contracts To Buy Homes Inch Higher

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes signed during the month. Because it tracks signings, and not closings, it’s considered a good gauge of upcoming home sales. In October, the Index was virtually flat, rising just 0.2 percent from the month before. It is now 3.9 percent higher than at the same time last year. Lawrence Yun, NAR’s chief economist, says pending sales have plateaued due to there not be enough homes available for sale. “Contract signings in October made the most strides in the Northeast, which hasn’t seen much of the drastic price appreciation and supply constraints that are occurring in other parts of the country,” Yun said. “In the most competitive metro areas – particularly those in the South and West – affordability concerns remained heightened as low inventory continues to drive up prices.” In fact, regional estimates do show pending sales up 4.5 percent in the Northeast. On the other hand, contract signings rose just 1.7 percent in the West, while the Midwest and South both saw declines. More here.

Existing Home Sales Slip In October

After climbing almost 5 percent in September, sales of previously owned homes fell in October, according to new estimates from the National Association of Realtors. Total existing-home sales – which include single-family homes, townhomes, condominiums, and co-ops – dropped 3.4 percent from the month before, though they remain 3.9 percent above last year’s level. Lawrence Yun, NAR’s chief economist, said sales were expected to slow. “New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” Yun said. Despite low inventory, however, Yun believes sales will continue to see gains. “As long as solid job creation continues, a gradual easing of credit standards, even with moderately higher mortgage rates, should support steady demand and sales continuing to rise above a year ago.” Also in the report, the share of first-time home buyers rose in October to 31 percent, up from 29 percent in September. All cash sales were 24 percent of total transactions, while distressed sales declined 6 percent from the month before. More here.

Repeat Home Buyers Driving Sales Gains

The National Association of Realtors’ 2015 Profile of Home Buyers and Sellers is a survey that measures the preferences, motivations, and demographics of recent buyers and sellers. According to the results, the increased number of home sales this year has largely been driven by repeat buyers who used the sale of their current home to come up with a down payment on a new house. In fact, 53 percent of repeat buyers used the money they made selling their home as the main source of their down payment. That represents a 6 percent increase over last year and a 13 percent increase from 2012. It also explains a lot about the demographic breakdown of recent home buyers. For example, there has been a smaller share of first-time home buyers active in the market over the past few years. Historically, first timers account for about 40 percent of home sales. This year, they made up just 32 percent. With improved employment conditions and a strengthening housing market, there was an expectation that they would be more active this year. But, according to Lawrence Yun, NAR’s chief economist, debt is the reason young Americans aren’t buying. “First-time buyers reported that debt (all forms) delayed saving for a down payment for a median of three years, and among the 25 percent who said saving was the most difficult task, a majority (58 percent) said student loans delayed saving,” Yun said. More here.

Pending Home Sales Slip In September

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that were signed during the month. Because it measures signings and not closings, the index is considered a good indication of what home sales will do in the coming months. In September, pending home sales fell 2.3 percent. It was the second straight month contract signings declined. Lawrence Yun, NAR’s chief economist, said there are many reasons contributing to September’s dip in activity. “There continues to be a dearth of available listings in the lower end of the market for first-time buyers, and Realtors in many areas are reporting stronger competition than what’s normal this time of year because of stubbornly low inventory conditions,” Yun said. “Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach.” But despite slowing sales and low inventory levels, the number of contracts signed in September was still 3 percent above last year’s level and pending sales have now increased year-over-year for 13 straight months. And, according to Yun, housing demand should remain strong for the foreseeable future due, in part, to lower-than-normal mortgage rates, rents near 8-year highs, and continuing gains in the job market. More here.

Existing Home Sales Rebound In September

After slowing in August, sales of previously owned homes rebounded in September, according to the National Association of Realtors. Existing home sales – which include single-family homes, townhomes, condominiums, and co-ops – increased 4.7 percent from the month before and are now 8.8 percent above last year’s pace. Lawrence Yun, NAR’s chief economist, said moderating home prices and still-low mortgage rates are keeping demand strong. “September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007,” Yun said. “While current price growth around 6 percent is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace.” In fact, prices rose year-over-year for the 43rd consecutive month in September. But, while price increases are driven, in part, by a lower-than-normal number of homes available for sale, they also lead to increasing equity for current homeowners. And, as equity has improved, more current homeowners have been motivated to put their homes up for sale. This is helping to moderate price increases, in addition to boosting inventory and the number of trade-up buyers active in the market. More here.

Pending Home Sales Slip But Remain Strong

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts signed to buy homes each month. Because it measures contract signings – and not closings – it is a good indicator of future home sales. In August, the index fell 1.4 percent. Despite the dip, however, it remains 6.1 percent above last year’s level and has now risen over year-before levels for 12 consecutive months. Lawrence Yun, NAR’s chief economist said, even with the slight decline, demand is outpacing housing supply, which will continue to put upward pressure on home prices. “Pending sales have leveled off since mid-summer, with buyers being bounded by rising prices and few available and affordable properties within their budget,” Yun said. “Even with existing-housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago.” In other words, despite a slightly more challenging environment for buyers, demand is still healthy. In fact, a closer look at the numbers reveals that pending home sales were actually up in the West and unchanged from last month in the Midwest. Which means, August’s declines were confined to the South and Northeast. More here.

Sales Slow As Summer Season Winds Down

New estimates from the National Association of Realtors show a dip in the number of previously owned homes sold in August compared to the month before. Total existing-home sales – including single-family homes, townhomes, condominiums, and co-ops – fell 4.8 percent from July, though they remain 6.2 percent above last year’s pace. “Sales activity was down in many parts of the country last month – especially the South and West – as the persistent summer theme of tight inventory levels likely deterred some buyers,” Lawrence Yun, NAR’s chief economist, said. “The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year.” In fact, the median existing-home price for all housing types in August was $228,700, 4.7 percent above last year. Also in the report, the number of homes available for sale rose in August. Total housing inventory was up 1.3 percent at the end of the month. Rising inventory offers potential home buyers more choices, in addition to helping moderate the rate at which prices increase. More here.