Existing Home Sales Reflect Dwindling Investor Participation

The investors who kept the real estate market living and breathing throughrnthe worst days of the housing crash continue to drift out of the market thernNational Association of Realtors® (NAR) said on Monday.  As a result of this and other factors thernsale of existing homes fell slightly in August, ending four straight months ofrngains.</p

Sales of existing homes including single-family houses, townhomes,rncondominiums, and co-op apartments, slipped 1.8 percent from July sales to arnseasonally adjusted annual rate of 5.05 million.  Sales in July were revised down from 5.15rnmillion to 5.14 million.  NAR said that,rndespite the slip, sales in August were still at the second highest rate of thernyear.  They still, however, remain 5.3rnpercent below the 5.33 unit level in August 2013, the second highest sales pacernof that year.  Individual investorsrnpurchased 12 percent of homes in August, down from 16 percent in July and 17rnpercent in August 2013. </p

Sales of single family homes also slipped by 1.8 percent to a seasonallyrnadjusted annual rate of 4.46 million from 4.54 million in July.  This puts single family sales 4.9 percentrnbelow the rate of 4.69 million units in August 2013.  Existing condo and co-op sales were down 1.7rnpercent to a rate of 590,000 units from 600,000 the previous month.  Those sales are off of the 640,000 unit pacernof a year earlier by 7.8 percent.</p

Lawrence Yun, NAR chief economist, says sales activity remains stronger thanrnearlier in the year, but fell last month as investors stepped away. “Therernwas a marked decline in all-cash sales from investors,” he said. “On thernpositive side, first-time buyers have a better chance of purchasing a home nowrnthat bidding wars are receding and supply constraints have significantly easedrnin many parts of the country.”</p

Yun adds, “As long as solid job growth continues, wages shouldrneventually pick up to steadily improve purchasing power and help fully releasernthe pent-up demand for buying.”</p

Probably reflecting the pull-back from investors, all-cash sales dropped forrnthe second month to 23 percent of total transactions compared to 29 percent inrnJuly.  This was the lowest overall sharernsince December 2009.  NAR President StevernBrown says a gradual decline in investor activity, many who pay in cash, isrngood for the market and creates more opportunity for buyers who rely onrnfinancing to purchase a home.  Sixty-fourrnpercent of investors paid cash in August.</p

The median existing-home price for all housing types in August was $219,800,rna year-over-year increase of 4.8 percent and the 30^th straight monthrnof annual gains. The median existing single-family home price was $220,600 inrnAugust, up 5.2 percent from August 2013 and the median existing condo price wasrn$213,900 in August, 2.1 percent higher than a year earlier. </p

The percentage of first time home buyers has remained below 30 percent for 16 of the pastrn17 months.  The first-time buyer share inrnAugust remained unchanged from July’s 29 percent.   </p

Six percent of sales in August were of foreclosed property and 2 percentrnwere short sales, down from a total distressed share of 12 percent of homernsales one year earlier.  Foreclosuresrnsold for an average discount of 14 percent below market value in August comparedrnto 20 percent in July, while short sale discounts fell from 14 percent in July torn10 percent in August. </p

Total housing inventory at the end of August declined 1.7 percent to 2.31rnmillion existing homes available for sale, a 5.5-month supply at the currentrnsales pace. This unsold inventory is 4.5 percent higher than a year ago, whenrnthere were 2.21 million existing homes available for sale.</p

Median marketing time increased from July to August by five day to 53 days</bfor the typical property and was ten days longer than a year earlier.  Short sales were on the market for a medianrnof 135 days in August, while foreclosures sold in 53 days and non-distressedrnhomes typically took 52 days. Forty percent of homes sold in August were on thernmarket for less than a month.</p