There are affordable metro areas in the U.S. right now with above-average hiring and a large segment of current renters who earn enough income to qualify to buy a home.
NAR reviewed employment growth, household income and qualifying income levels in nearly 100 of the largest metropolitan statistical areas across the country to determine which areas with employment gains above the recent national average also have the largest share of renters who can currently afford to buy a home. Of the top 10 metro areas with the highest share of renters who earn enough to buy, nine were either in the South or Midwest — including three cities in Ohio.
Washington, D.C. – August 24, 2016 (Realtor.org) Slowed by frustratingly low inventory levels in many parts of the country, existing-home sales lost momentum in July and decreased year-over-year for the first time since November 2015, according to the National Association of Realtors®. Only the West region saw a monthly increase in closings in July.
Total existing-home sales(1), which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.2 percent to a seasonally adjusted annual rate of 5.39 million in July from 5.57 million in June. For only the second time in the last 21 months(2), sales are now below (1.6 percent) a year ago (5.48 million).
Lawrence Yun, NAR chief economist, says existing sales fell off track in July after steadily climbing the last four months. “Severely restrained inventory and the tightening grip it’s putting on affordability is the primary culprit for the considerable sales slump throughout much of the country last month,” he said. “Realtors® are reporting diminished buyer traffic because of the scarce number of affordable homes on the market, and the lack of supply is stifling the efforts of many prospective buyers attempting to purchase while mortgage rates hover at historical lows.”
Adds Yun, “Furthermore, with new condo construction barely budging and currently making up only a small sliver of multi-family construction, sales suffered last month as condo buyers faced even stiffer supply constraints than those looking to purchase a single-family home.”
The median existing-home price(3) for all housing types in July was $244,100, up 5.3 percent from July 2015 ($231,800). July’s price increase marks the 53rd consecutive month of year-over-year gains.
Total housing inventory(4) at the end of July inched 0.9 percent higher to 2.13 million existing homes available for sale, but is still 5.8 percent lower than a year ago (2.26 million) and has now declined year-over-year for 14 straight months. Unsold inventory is at a 4.7-month supply at the current sales pace, which is up from 4.5 months in June.
“Although home sales are still expected to finish the year at their strongest pace since the downturn, thanks to a very strong spring, the housing market is undershooting its full potential because of inadequate existing inventory combined with new home construction failing to catch up with underlying demand,” adds Yun. “As a result, sales in all regions are now flat or below a year ago and price growth isn’t slowing to a healthier and sustainable pace.”
The share of first-time buyers was 32 percent in July, which is below last month (33 percent) but up from 28 percent a year ago. First-time buyers represented 30 percent of sales in all of 2015.
All-cash sales were 21 percent of transactions in July, down from 22 percent in June, 23 percent a year ago and the lowest share since November 2009 (19 percent). Individual investors, who account for many cash sales, purchased 11 percent of homes in July, unchanged from June and down from 13 percent a year ago. Seventy percent of investors paid in cash in July.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage dropped from 3.57 percent in June to 3.44 percent in July. Mortgage rates have now fallen five straight months and in July were the lowest since January 2013 (3.41 percent). The average commitment rate for all of 2015 was 3.85 percent.
NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says in addition to affordability concerns, an issue seen earlier in the housing recovery may be reemerging. Realtors® are indicating that appraisal complications are appearing more frequently as the reason why a contract signing experienced a delayed settlement.
“Appraisal-related contract issues have notably risen over the past year and were the root cause of over a quarter of contract delays in the past three months(5),” he said. “This is likely a combination of sharply growing home prices in some areas, the uptick in home sales this year and the strong refinance market overworking the already reduced number of practicing appraisers. Realtors® are carefully monitoring this trend, and some have already indicated they’re extending closing dates on contracts to allow extra time to accommodate the possibility of appraisal-related delays.”
Coming in at the lowest share since NAR began tracking in October 2008, distressed sales(6) – foreclosures and short sales – were 5 percent of sales in July, down from 6 percent in June and 7 percent a year ago. Four percent of July sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in July (11 percent in June), while short sales were discounted 16 percent (18 percent in June).
Properties typically stayed on the market for 36 days in July, up from 34 days in June but down from 42 days a year ago. Short sales were on the market the longest at a median of 95 days in July, while foreclosures sold in 54 days and non-distressed homes took 34 days. Forty-seven percent of homes sold in July were on the market for less than a month.
Inventory data from Realtor.com® (link is external) reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in July were Denver-Aurora-Lakewood, Colo., San Francisco-Oakland-Hayward, Calif., San Jose-Sunnyvale-Santa Clara, Calif., and Seattle-Tacoma-Bellevue, Wash., all at a median of 32 days; and Vallejo-Fairfield, Calif., at a median of 36 days.
Single-family and Condo/Co-op Sales
Single-family home sales decreased 2.0 percent to a seasonally adjusted annual rate of 4.82 million in July from 4.92 million in June, and are now 0.8 percent under the 4.86 million pace a year ago. The median existing single-family home price was $246,000 in July, up 5.4 percent from July 2015.
Existing condominium and co-op sales dropped 12.3 percent to a seasonally adjusted annual rate of 570,000 units in July from 650,000 in June, and are now 8.1 percent below July 2015 (620,000 units). The median existing condo price was $228,400 in July, which is 4.1 percent above a year ago.
July existing-home sales in the Northeast descended 13.2 percent to an annual rate of 660,000, and are now 5.7 percent below a year ago. The median price in the Northeast was $284,000, which is 3.3 percent above July 2015.
In the Midwest, existing-home sales fell 5.2 percent to an annual rate of 1.28 million in July (unchanged from a year ago). The median price in the Midwest was $194,000, up 5.0 percent from a year ago.
Existing-home sales in the South in July declined 1.8 percent to an annual rate of 2.22 million, and are now 1.8 percent below July 2015. The median price in the South was $214,500, up 6.6 percent from a year ago.
Existing-home sales in the West rose 2.5 percent to an annual rate of 1.23 million in July, but are still 0.8 percent below a year ago. The median price in the West was $346,100, which is 6.4 percent above July 2015.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.
1. 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 rebenchmarks 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 percent of total home sales, are based on a much larger data sample – about 40 percent 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.
2. Primarily because of contract delays related to the rollout of Know Before You Owe, November 2015 was the last year-over-year decline (3.6 percent). Prior to that, the last annual sales decrease was September 2014 (2.1 percent).
3. 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.
4. 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 percent of transactions and condos were measured only on a quarterly basis).
5. According to the Realtors® Confidence Index, 27 percent of contracts between May and July with a delayed settlement were because of appraisal related issues. This is up from 18 percent the first quarter of this year.
6. 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 Realtor.org.
NOTE: NAR’s Pending Home Sales Index for July will be released August 31, and Existing-Home Sales for August will be released September 22; release times are 10:00 a.m. ET.
Nearly Half of First-Time Buyers Driven to Housing Market Because of High Rent
Seattle, WA – August 25, 2016 (BUSINESS WIRE)–Worries about affordability are growing more predominant among homebuyers, according to Redfin (www.redfin.com), the next-generation real estate brokerage.
Just over 28 percent of buyers said they were most worried that “prices are rising or are too high,” the largest percentage to cite this concern in more than a year. The gap between affordability and other concerns has widened, based on a Redfin survey of more than 1,800 homebuyers.
The second-most-cited top concern was “too much competition from other buyers,” at only 13 percent, followed by a lack of homes to choose from, at 12.4 percent. In previous surveys the second- and third-most cited concerns made up a far higher percentage of total responses. Last year it was 31.4 percent, while in May it was 33.5 percent.
Among millennials — homebuyers 35 and younger — affordability worries were even more acute, with 32.5 percent citing it as their top concern and 10.3 saying they might not have enough money for a down payment.
High Rent Driving Tenants to Become Owners
Nearly half of all first-time homebuyers, 45.4 percent, said they were most influenced to get into the housing market because of high rent. In comparison, a year ago 24.7 percent of first-time buyers said they were house hunting because of high rent.
Among all buyers surveyed, 22 percent said the cost of rent motivated them to get into the market, up substantially from last year’s 12.8 percent but down from 24.4 percent in May.
To read the full report, complete with charts, additional statistics and methodology, please visit: www.redfin.com.
Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the most accurate home-value estimate online, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commission. Redfin serves more than 83 major metro areas across the U.S. The company has closed more than $31 billion in home sales, and saved customers more than $335 million in fees, and counting.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center.
Sales Post Largest Year-over-Year Decline in Four Years Due in Part to Below-Average Number of Business Days This July
Seattle, WA – August 18, 2016 (BUSINESS WIRE) Home prices were up 5.3 percent in July from last year, according to the latest report from Redfin (www.redfin.com), the next-generation real estate brokerage.
A dearth of housing inventory persists as the number of homes newly listed in July fell 6 percent, the largest annual decrease so far this year. The total number of homes fell by 6.6 percent in July, the third consecutive month that inventory fell by more than 6 percent.
Sales fell 10.9 percent year over year, the biggest national sales decline since April 2011, but the slowdown last month has more to do with this year’s calendar than buyer demand. Because the month started on a Friday, there were five full weekends plus one national holiday, leaving only 20 days available for home closings.
To determine just how much of the drop in sales can be attributed to the calendar, Redfin analysts calculated the average frequency at which home sales closed on each day in each month since 2010. As a result, Redfin analysts estimate that all else equal, sales would have fallen by 7.5 percent this July from last year simply because of the way the days laid out on the calendar.
“There is a weekly pattern to real estate that is highly affected by the days of the week,” said Nela Richardson, Redfin chief economist. “In general, buyers tour on the weekends, make offers on Mondays and Tuesdays and close on Fridays. Last month was composed of more days for touring and fewer for closing, and the number of sales recorded took a hit because of it.”
“Yet not all of last month’s sales decline was due to the calendar,” said Richardson. “Election-year anxiety, stock market queasiness and general economic malaise combined with a lack of available homes on the market also drove sales lower. We attribute roughly a third of July’s sales decline to these market trends.”
Despite the downward pressure, some markets still saw strong sales activity. Camden, NJ led the nation in year-over-year sales growth, up 28.5%, followed by St. Louis, MO, up 18.9%, and Baltimore, MD, where sales grew 6.2% from a year ago.
Redfin also took an in-depth look at home prices, inventory and sales across neighborhoods for four cities: Chicago, Los Angeles, San Francisco and Washington, D.C.
Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the industry’s most accurate home-value estimate, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commission. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales, and saved customers more than $335 million in fees, and counting.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center.
To be added to Redfin’s press release distribution list, subscribe here.
Stephanie Spear of NAR Government Affairs meets with a representative of the Mortgage Bankers Association to discuss capital standards and how regulatory issues could impact the availability of mortgage financing for commercial real estate.