"Washington, March 23, 2010
Lawrence Yun, NAR chief economist, said widespread winter storms in February may mask underlying demand. “Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said.
“Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”
Total housing inventory at the end of February rose 9.5 percent to 3.59 million existing homes available for sale, which represents an 8.6-month supply2 at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 percent below a year ago.
“The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,” Yun said. “If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.”
The national median existing-home price3 for all housing types was $165,100 in February, which is 1.8 percent below February 2009. Distressed homes, generally sold at discount, accounted for 35 percent of sales last month.
A parallel NAR practitioner survey4 shows first-time buyers purchased 42 percent of homes in February, up from 40 percent in January. Investors accounted for 19 percent of transactions in February, compared with 17 percent in January; the remaining sales were to repeat buyers.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said some buyers are just beginning to realize the urgency of acting before the contract deadline for the tax credit. “If home buyers want this tax credit there is literally no time to waste,” she said.
“Most buyers spend several months looking at a dozen homes before they make a contract offer, but less than six weeks are left before the April 30 contract deadline. If you’re sure about the kind of home you want and the neighborhood where you’d like to live, you need to begin working with a Realtor® now to help you find what you want, negotiate on your behalf and ensure that you meet the necessary deadlines, including loan qualification,” Golder said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.99 percent in February from 5.03 percent in January; the rate was 5.13 percent in February 2009.
Single-family home sales declined 1.4 percent to a seasonally adjusted annual rate of 4.37 million in February from a pace of 4.43 million in January, but are 4.3 percent higher than the 4.19 million level a year ago. The median existing single-family home price was $164,300 in February, down 2.1 percent from February 2009.
Existing condominium and co-op sales rose 4.8 percent to a seasonally adjusted annual rate of 650,000 in February from 620,000 in January, and are 30.3 percent above the 499,000-unit pace in February 2009. The median existing condo price5 was $170,200 in February, down 0.2 percent from a year ago.
Regionally, existing-home sales in the Northeast rose 2.4 percent to an annual pace of 840,000 in February and are 12.0 percent above a year ago. The median price in the Northeast was $254,700, up 7.5 percent from February 2009.
Existing-home sales in the Midwest increased 2.8 percent in February to a level of 1.11 million and are 8.8 percent higher than February 2009. The median price in the Midwest was $128,000, which is 2.0 percent below a year ago.
In the South, existing-home sales slipped 1.1 percent to an annual pace of 1.85 million in February but are 6.9 percent above a year ago. The median price in the South was $139,600, down 4.2 percent from February 2009.
Existing-home sales in the West fell 4.7 percent to an annual rate of 1.22 million in February but are 3.4 percent higher than February 2009. The median price in the West was $207,900, down 9.8 percent from a year ago.
“A lack of affordable housing inventory is holding back sales and pressuring prices to be bid upwards in many California markets,” Yun noted." [Source: Realtor.org]
Regarding shadow housing inventory, read this note from S&P. I recommend you check out the chart trend of seriously delinquent loan balances aka 90+ days delinquent or in foreclosure.
"The current "shadow inventory" (including all delinquent loans, not only those that are real estate owned [REO]) of troubled mortgages will likely take about 33 months or nearly three years to clear at the current rate of liquidations. Moreover, we believe this estimate is conservative, as we do not assume any loans that have yet to show any serious signs of distress to date will default in the future and further increase the overhang of homes. Nonetheless, we believe that in reality additional loans will default in the near future due to the weak economic environment, distressed residential home values, and the resulting contraction in the supply of mortgage finance." (Read article: The Shadow Inventory Of Troubled Mortgages Could Undo U.S. Housing Price Gains at S&P).
Chart 1) Months Supply of Existing Homes (over 1 year)
Chart 2) Existing Home Sales (over 1 year)
Source: NAR Data from table
Zillow also provides great information on housing. See the recent blog post from Stan Humphries their Chief Economist on March 9, 2010.
"Consistent with trends that materialized in December, home value change continued to weaken in many markets around the country during January. Nationally, while the annualized appreciation rate continued to improve -– increasing from -5.5% in December to -4.8% in January –- home values declined 0.33% from the prior month (a slightly larger monthly depreciation than the 0.27% recorded in December)."
For recent posts on housing (Chicago housing index, builder confidence, Meredith Whitney on double dip) click here.