Existing home sales, including single-family, town-homes, condominiums and co-ops increased 3.6% in June to a seasonally adjusted annual rate of 4.89 million units. This rate is almost identical to last years sales at the same time which is a first in a quite a while. May’s rate was down 3.6% from a year ago and June is down just 0.2% from a year ago.
Also for the first time in a while, all four regions of the U.S. had an increase in sales for the month with the West leading the pack with a 6.4% increase followed by the South at 4.9%, Northeast at 2.5% and the Midwest a 0.9%. Read more…
The survey, which focused on affordability, foreclosures and refinancing showed:
Employment concerns and the ability to make mortgage payments are the greatest barriers to home ownership today. This is particularly true for those people 25-49 years of age.
More than three-fourths (77.4%) of consumers think a median income family can only afford 50% or fewer of the homes for sale in their area. This is in sharp contrast to that fact that a family earning the median income can actually afford nearly 75% of the current homes for sale on Realtor.Com.
Homeowners that have recently refinanced their mortgages are using the monthly savings from lower payments in different ways: 12.2% to pay their monthly expenses and 12.3% to remodel or repair their home
One out of five people (20.1%) who say they or someone they know may be facing foreclosure in the near future have not yet taken steps to resolve their situation. Additionally 22.4% have not taken any steps yet but plan to do so before the Making Home Affordable refinance program expires June 10, 2010.
First off, my usual disclaimer…I am not an attorney and this is not intended to be legal advice or a legal opinion.
Dennis Norman
Now that we have that out of the way lets talk about options that may be available to you if you are one of the 20% of homeowners that a recent study says owes more on their mortgage than their homes are worth.
If you do find yourself in this situation fortunately today there are some options available worth considering:
See if you qualify for the Making Home Affordable Loan Modification Plan. This program is for those homeowners that are struggling to make their payments, or may have even missed a payment or two, but could make their payments if the amount was reduced. To complete a short questionnaire and find out if you may be eligible for this click here.
If you have an FHA loan you may wish to contact a HUD approved counseling agency to explore what options may be available to you.
Sales for May were at a seasonally-adjusted annual rate of 4,770,000 homes which is a 2.4% increase over Aprils’ rate of 4,660,000. May’s rate is 3.6% below last year which is pretty consistent with Aprils year to year decline of 3.5%.
The Midwest region which has been holding pretty steady had a 9% increase in sales for the month followed by the Northeast with a 3.9% increase and the South with no change from April. The West was the only region reporting a decline in sales albeit a mere 0.9% decline.
Median home prices in the U.S. rose 3.8% from an adjusted median price of $166,600 for April to $173,000 in May which is 16.8% less than a year ago. The West was the only region that saw a decline in price from April to May with prices dropping from 204,200 to 197,700. The West has seen the biggest decline in median prices from a year ago with a decline of 30.6%, followed by the Northeast with a 12.5% decline, the Midwest at 10.4% and the South at 9.9%.
I’m going to repeat my recent mantra….overall I think the numbers show the market is trying to find a bottom and may be leveling off.
Lawrence Yun, the chief economist for the National Association of REALTORS(R) expected an improvement. He said “Historically low mortgage interest rates clearly drew buyers into the market and housing remains very affordable even with a recent uptick in rates. First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisal are stalling transactions.”
According to a report issued by IHS Global Insight, house prices in the first quarter of 2009 declined in 199 of the 330 metro markets they monitor. At just over 60% of the metros this represents a huge decrease from 4th quarter 2008 when 312, or almost 95% of the metros, showed declining prices.
For first quarter 2009 the price decline nationally was 2.2%, annualized, compared with an annualized decline of 12.5% for 4th quarter 2008 which once again represents a significant move in a positive direction for the market.
Another interesting, and encouraging, item in the report is their measurement of valuation and whether real estate is overvalued or undervalued. For the first quarter 2009 the report shows that overall the real estate market is currently undervalued by 10.6% which is a significant change from the peak of the market in 4th quarter 2005 when their reports showed the market as a whole was overvalued by 24.2%. Currently only one market, Atlantic City, New Jersey, is considered to be “extremely overvalued” coming in at 44.1% over valued. This is a sharp contrast to 2005 when IHS Global Insight considered 52 metro areas to be extremely overvalued. Read more…
Yesterday, Bankrate, Inc. issued their weekly mortgage interest rate report showing that mortgage rates jumped this week with 30-year fixed-rate mortgages averaging 5.45%, up from 5.24% last week, with an average of 0.41% in discount and origination fees.
The report shows 15-year fixed-rate mortgages were also higher this week at an average of 4.86%, up from 4.74% last week.
While rates are not at the lowest they have been recently they are still near historic lows. Six months ago the average 30-year fixed-rate mortgage was at 6.39% so even with rates increasing slightly this week they are still significantly lower than the recent past and at near-historic lows.
Sales for April were at a seasonally-adjusted annual rate of 4,680,000 homes which is down 3.5% from last year, which means in year over year numbers things are improving because last months annual rate was down 7.1% from the year before.
The Midwest region which has held steady for the prior two months saw a modest 2% decrease from March and was the only region with decrease this time. The Northeast region had the highest increase in sales over March at 11.6% but is still down 10.5% from a year ago. The West had a 3.5% increase over March and is still the only region showing an increase over the prior year with a 19.4% increase. The South had a 1.8% increase over March and is down 8.9% from a year ago.
Lawrence Yun, NAR chief economist, said “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment.”
Pending sales in the US overall were up 3.2% from February and up 1.1% from last year. Two of the four regions showed an increase; the south with an 8.5% increase for the month and 7.7% increase over a year and the West with an increase of 3.9% for the month and 1.7% increase over a year ago. The Midwest had a modest decline in sales of 1.0% for the month but is still up 8.2% from a year ago and the Northeast had a 5.7% drop for the month and is down 24.1% from a year ago.
This data seems to support two things I have been saying recently: one, it appears to me there may be a chance we are finally close to the bottom of the market and two, the prices in the Northeast have not dropped enough to stimulate sales.
To see the interview with Lawrence Yun by REALTOR(R) Magazine click on the video below.
Sales for March were at a seasonally-adjusted annual rate of 4,570,000 homes which is down 7.1% from last year at the same time. The Midwest region really seems to have leveled off with sales at exactly the same annual rate for March as February and February was just up 1% over January. The Northeast saw the biggest drop this month at 8.0% following February’s 15.6% increase over January. The west region saw sales drop 4.2% for the month but is still the only region showing an increase in sales from a year ago with a 18.9% increase. The South saw a modest 1.7% decline. Read more…
Lawrence Yun, NAR chief economist, said “Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains.”
Three of the four regions of the country showed an increase with the West showing a decline of 13.5% from January however has been reporting higher sales activity than the other regions for several months. In this model an index of “100″ would mean the current contract activity is equal to the amount of contract activity in 2001. From August, 2008 through January , 2009 the index for the west was above 100. For February it dropped to 89.6 which is still above the index of 82.1 for the U.S. as a whole.
The region with the lowest index was the Northeast at 63.9 however this still represents a 10.6% increase over the prior month.
As I have been saying in recent posts it appears to me there may be a chance we are finally close to the bottom of the market. While I don’t look for any sort of quick turn around and expect the market will hang around at the bottom for a while as sales slowly build over time, it is still good news.
