clip_image002

THE MORTGAGE CORNER

Existing-home sales, including single-family, townhomes, condominiums and co-ops, increased in June for the third consecutive month—3.6 percent to a seasonally adjusted annual rate of 4.89 million units from 4.72 million in May. That is delaying any uptick in new home sales, however.

clip_image004

Lawrence Yun, NAR chief economist, is hopeful about the gain, anyway. “The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”

Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago.

clip_image006

“This is another hopeful sign – if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun said. An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.

clip_image008

New-home sales are another matter.  June’s 11 percent increase brought sales back to last November’s level, but it is still down 21 percent in 12 months.   The consensus is that all the existing-home foreclosures are diverting buyers from new homes, with deals too good to pass up. But inventories continue to decline, a good sign for builders that will spur housing construction, as the NAHB builders’ sentiment survey continues to climb. In fact, housing starts are already rising, with single-family construction up 31 percent from its January-February historic low.

clip_image010

Single-family existing-home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.

Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price was $183,300 in June, down 18.9 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 2.5 percent, 0.9 percent in the Midwest, 4 percent in the South, and 6.4 percent in the West.

Harlan Green © 2009