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Existing Home Sales Slip in February, Still Outpacing 2011 Sales

by devteam March 22nd, 2012 | Share

Sales ofrnexisting homes fell 0.9 percent in February to a seasonally adjusted annualrnrate of 4.59 million homes according to data released this morning by thernNational Association of Realtors® (NAR). rnThe increase was over January sales that were adjusted from an originalrnestimate of 4.57 million to 4.63 million sales. Despite the slight month-over-month decrease,rnFebruary sales were up 8.8 percent over the 4.22 million pace during the samernperiod in 2011.  Existing home sales arerncompleted transactions that include single-family homes, townhomes,rncondominiums and co-ops.</p

Lawrence Yun, NAR chief economist,rnsaid underlying factors are much better compared to one year ago.  “Thernmarket is trending up unevenly, with record high consumer buying power and sustainedrnjob gains giving buyers the confidence they need to get into the market,” hernsaid.  “Although relatively unusual, there will be rising demand for bothrnrental space and homeownership this year.  The great suppression inrnhousehold formation during the past four years was unsustainable, and a pent-uprndemand could burst forth from the improving economy.”</p

Single family home sales were at arnrate of 4.06 million, down 1 percent from January and 9.4 percent higher thanrnone year earlier.  Condo and coop salesrnwere unchanged from January at a rate of 530,000 and 3.9 percent higher than inrnFebruary 2011.</p

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All four regions are seeing homernsales at a higher level than one year ago, but sales were off in the Northeastrnand West from January by 3.3 percent and 3.2 percent respectively.  Year over year those regions saw increases ofrn5.5 percent and 6.1 percent.  Sales inrnthe Midwest were up 1 percent for the month and 13.3 percent for the year andrnin the South February sales were 0.6 percent higher than January’s and 9.3rnpercent above those in February 2011.</p

Fifty-one percent of NAR membersrnreport that contracts settled on time in February, 18 percent had delays and 31rnpercent experienced contract failures; the cancellation rate was 33 percent inrnJanuary and 9 percent in February 2011.  Contract failures are commonlyrncaused by declined mortgage applications and failures in loan underwriting fromrnappraisals coming in below the negotiated price.</p

 “Many buyers are staying in the market afterrnexperiencing a contract failure and making an offer on another property,rnshowing their determination to take advantage of the favorable conditions, butrnthe cancellations are contributing to an uneven sales pattern,” Yun said.</p

NAR reports that there are currentlyrn2.43 million homes for sale in the U.S., a 6.4 month supply at the currentrnsales pace.  In January there were 2.33rnmillion homes for sale, a 6.0 month supply, but that was the lowest inventoryrnsince at least 2008.  The number of homesrnfor sale has dropped by 19.3 percent since February 2011 and months to absorb haverndropped 25.6 percent from 8.6 months.</p

Existing home prices rose 0.3rnpercent in February 2012 compared to February 2011 to a median of $156,000 forrnall housing types.  Distressed homes,rnforeclosures and short sales, accounted for 34 percent of home sales inrnFebruary with foreclosures accounting for 20 percent and short sales 14rnpercent.  In January distressed homesrnwere 35 percent of the market and one year earlier they accounted for 39rnpercent of sales.</p

While NAR warns against placingrnsignificance on month -to-month price changes, the median price for a singlernfamily home did increase from $154,600 in January to $157,100 in February, thernfirst monthly increase since November.  February’srnsales price represented an increase of 0.1 percent from February 2011 when thernmedian price was $156,900.   The medianrnprice of a condo was $153,000 in February, an annual increase of 1.6 percent.</p

The median price of all homesrnincreased year-over-year by 1.8 percent in the South to $138,100 and by 3.1rnpercent in the West to $195,300.  Pricesrnwere down on the same basis in the Northeast where the median price of $225,800rnwas 1.9 percent lower than a year earlier and the Midwest where the medianrnprice of 120,500 was 0.5 percent below the February 2011 median.</p

All-cash sales rose to 33 percent ofrntransactions in February from 31 percent in January; they were 33 percent inrnFebruary 2011.  Investors account for the bulk of cash transactions.</p

Investors purchased 23 percent ofrnhomes in February, unchanged from January and up from 20 percent in Februaryrn2011.  First-time buyers accounted for 32 percent of transactions inrnFebruary, down from 33 percent in January and 34 percent in February 2011.</p

 “The bottom line is investorsrnand first-time buyers are competing for bargain-priced properties in much ofrnthe country, with home prices showing signs of stabilizing in many areas,”   NAR President Moe Veissirnsaid.  “People realize that homeownership is an investment in theirrnfuture.  Given an apparent over-correction in most areas, over the longrnterm home prices have nowhere to go but up.”

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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