NAR Archives

Home Buyers Get An Early Start On Spring

A home sale isn’t official until the closing process has been completed and all the paperwork has been signed. However, that usually doesn’t happen until about a month after the buyer’s offer is accepted. In the meantime, the sale is considered pending. In other words, the home is under contract but not officially sold. But, though it hasn’t been made official, more often than not these pending sales end up being completed sales. For this reason, the National Association of Realtors’ Pending Home Sales Index is a good indicator of future home sales and current buyer activity. In February, the index registered a 5.5 percent increase and reached its second highest reading since May 2006. In other words, buyer demand has been strong in the weeks leading up to the start of the spring sales season. Lawrence Yun, NAR’s chief economist, says the results prove buyers are eager to get the season started. “Buyers came back in force last month as a modest, seasonal uptick in listings was enough to fuel an increase in contract signings across the country,” Yun said. In fact, sales rose in all four regions, with the strongest increases seen in the Northeast and Midwest – where unseasonably warm weather may have led to an earlier than usual start to the buying season. More here.

Pending Home Sales Rise In December

When a buyer signs a contract to purchase a home, it is referred to as a pending sale because it usually takes a few weeks before the transaction closes and the house is considered officially sold. Since most of these transactions end in a sold house, the National Association of Realtors tracks them as a way of predicting the number of final sales that will be seen in coming months. In December, the NAR found pending sales up 1.6 percent from the month before. Lawrence Yun, NAR’s chief economist, says the year ended on a high note. “Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract,” Yun said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs.” Yun also points out that home sales figures vary depending on the price of the house. For example, sales of homes above $250,000 were up 10 percent over the year before in December. By comparison, sales of homes under $100,000 fell 11.6 percent. This indicates that there are more homes for sale at the higher end of the market than there are at more affordable levels. However, an expected increase in the number of new homes built this year could help balance the market, offering buyers more choices and helping to moderate future price increases on existing homes.

Smart Home Technology Beginning To Catch On

Though still new to most homeowners and buyers, smart home technology is starting to catch on. These days, you can find everything from smart thermostats to locks and light bulbs that use an Internet connection to allow you to control them from your phone or computer. These devices and home automation systems can add convenience, security, and energy efficiency to your home – in addition to the novelty of being able to dim all the lights in your house at once. Still, despite their seeming inevitability, a new report from the National Association of Realtors found that only 15 percent of real estate agents say they’re getting questions about the technology from their clients. That, however, is likely due to the products’ newness rather than their popularity. “More homeowners are adopting smart-home technology and that will likely impact buyers’ purchase decisions in the future,” NAR president, William E. Brown, says. “While consumer interest in this trend is still developing, Realtors are becoming well-versed in successfully marketing smart homes and their features, such as devices and appliances.” As home buyers become more aware of what’s possible, they will almost certainly add smart home features to their must-have list. More here.

Contract Signings Inch Forward In October

The National Association Of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed each month. Because it tracks contracts, and not closings, it is a good indicator of future sales of previously owned homes. In October, the index saw a 0.1 percent gain over the month before and is now 1.8 percent higher than the same time last year. Lawrence Yun, NAR’s chief economist, says pending sales are at their highest level since July. “Most of the country last month saw at least a small increase in contract singings and more notably, activity in all four major regions is up from a year ago,” Yun said. “Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.” But Yun believes affordability conditions will begin to suffer in the months ahead if there isn’t an increase in the number of homes available for sale. With mortgage rates rising and inventory low, buyers could begin to feel the effects, especially in markets where prices have already largely recovered. More here.

Home Sales Hit Highest Pace In A Decade

Autumn may typically be the time of year when home sales start to slow down but new numbers show sales of previously owned homes up for the second straight month and at their highest annual pace since February 2007. The data, from the National Association of Realtors, shows October sales up 2 percent over the month before and 5.9 percent above last year’s estimate. Lawrence Yun, NAR’s chief economist, says the past two months have been an autumn revival for the housing market. “October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” Yun said. “The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall.” Sales were up in all regions, with the largest gains in the South, where home sales rose 2.8 percent. Also in the report, the typical home stayed on the market for 41 days in October, though 43 percent of homes sold in less than a month. More here.

Who Buys Vacation Homes And Where They Buy

Everyone, at one time or another, has dreamed of buying a vacation home. Whether it was just a temporary fantasy brought on by a particularly perfect trip or it was something more real, it’s hard not to think about the joys of owning a place in your favorite town or getaway spot. But who’s actually buying vacation homes and where are the most popular locations to have a house? Well, the National Association of Realtors collects that info each year as part of their Investment and Vacation Home Buyers Survey. This year’s results show that, among vacation home buyers, the South is the most popular area to buy. In fact, a full 47 percent of vacation homes bought last year were purchased in the South. The West came in second with 25 percent. Also, beach houses outpace all others, with sales more than doubling the number of homes purchased in the mountains, at a lake, or in the country. And who’s most likely to buy a vacation home? Not surprisingly, Lawrence Yun, NAR’s chief economist, says older buyers. “Baby boomers at or near retirement continue to propel the demand for second homes, although headwinds softened the overall volume of vacation sales last year,” Yun said. In 2015, the median household income of a vacation home buyer was $103,700 and the property they purchased was a median distance of 200 miles away from their primary home. More here.

Home Buyers Stay Active Into Fall

Conventional wisdom has it that after the spring and summer sales season, the real estate market cools off. Home sellers wait until next year and buyers are too busy with the school year, holidays, and winter weather to bother shopping for a home. There is an argument to be made, however, that fall is a great time to shop for a home and, according to new numbers from the National Association of Realtors, many Americans agree. In fact, the NAR’s Pending Home Sales Index – which measures the number of contracts to buy homes signed during the month – was up 1.5 percent in September and is now 2.4 percent higher than last year. Lawrence Yun, NAR’s chief economist, says demand was strong, particularly in the West and South. “Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” Yun said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.” The Pending Home Sales Index is considered a good indicator of future home sales because it measures contracts to buy, rather than closings. More here.

First-Time Buyers Spur Home Sales Gain

September sales of previously owned homes rose 3.2 percent from the month before, according to new numbers released by the National Association of Realtors. The gains were a welcome change after a two-month slide. Lawrence Yun, NAR’s chief economist, said the improvement was due to a boost in the number of first-time home buyers active near the end of summer. “The home search over the past several months for a lot of prospective buyers, and especially for first-time buyers, took longer than usual because of competition for the minimal amount of homes for sale,” Yun said. “Most families and move-up buyers look to close before the new school year starts. Their diminishing presence from the market towards the end of summer created more opportunities for aspiring first-time homeowners to buy last month.” In fact, the share of first-time buyers rose to 34 percent in September. That’s the highest it’s been since July 2012. Historically, new home buyers represent closer to 40 percent of all home sales. Because there have been fewer first timers active in the market recently, an increasing number is seen as good news and vital to housing’s health. Also encouraging, the number of homes available for sale rose in September. At the end of the month, inventory was 1.5 percent higher than the month before. More here.

Do Most Buyers Rent Before Buying A Home?

For a lot of people, renting an apartment or house before buying their first home serves as a type of practice run. In fact, before 2003, about 80 percent of first-time home buyers rented prior to becoming homeowners. Typically younger, first-time buyers can get a taste of autonomy and responsibility as a renter before taking on the added challenges of homeownership. These days, however, an increasing number of first timers are skipping that step and buying their first house after living with a parent, relative, or friend. That seems unusual, but is probably explained by the fact that it’s easier to save for a down payment when living rent free. And – since a growing number of young Americans name saving for a down payment among the top obstacles preventing them from buying a house – this makes sense. But what about repeat buyers? Well, according to data from the National Association of Realtors’ Profile of Home Buyers and Sellersnearly 30 percent of repeat buyers last year were renting prior to purchasing their home. That’s a dramatic change from years past when it’s been as low as 10 percent. According to a report from Jessica Lautz, NAR’s managing director of survey research and communication, recent economic history helps explain the upswing. “The increase in renting may have occurred as sellers waited during housing market uncertainty to purchase another home and tight inventory drew out that process until they were able to find the ideal home to purchase,” Lautz writes. More here.

Contract Signings Hit Late Summer Slowdown

In August, the number of signed contracts to buy existing homes dropped 2.4 percent from the month before. The numbers, released by the National Association of Realtors, indicate a few things important to prospective buyers and home sellers. First, because contract signings precede closings, a decreasing number of pending sales is a good indicator of where home sales are headed. That means, a drop in August may show up as an upcoming decline in the number of recorded sales of previously owned homes. But why are sales slowing? Some of it is due to the natural ebb-and-flow of the market. As the summer season comes to a close, sales typically slow down. The other reason is inventory. Currently much of the country has a lower-than-usual number of homes for sale. That means, fewer choices for buyers and more upward pressure on prices. Lawrence Yun, NAR’s chief economist, says this is causing the housing market’s momentum to slow. “Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” Yun said. In fact, the Northeast saw a 1.3 percent increase in contract signings, while the Midwest, South, and West all saw declines. More here.