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NAR: Home Inventories Near Stabilization Levels – Contract Failures Persist

by devteam December 22nd, 2011 | Share

Existing home sales rose 4.0 percent inrnNovember to a seasonally adjusted annual rate of 4.42 million homes, up fromrn4.25 million in October according to data released Wednesday by the NationalrnAssociation of Realtors® (NAR).  Salesrnare running 12.2 percent above the 3.94 million unit pace in November 2010.</p

Single-family home sales rose 4.5rnpercent to an annual rate of 3.95 million from 3.78 million in October.  This is 12.9 percent above the 3.50 millionrnpace one year earlier.  Condominium andrncooperative apartment sales were unchanged from the previous month at an annualrnrate of 470,000, 6.8 percent above the 440,000 pace in November 2010.</p

The median price for existing homes ofrnall types was $164,200, down 3.5 percent from a year earlier.  Foreclosures and short sales which typicallyrnsell at deep discounts accounted for 29 percent of sales in November, up onernpercentage point from October but lower than the 33 percent of distressed salesrnrecorded in November 2010.  Last monthrnforeclosures accounted for two thirds of distressed sales and short sales forrnone third.</p

The median existing single-familyrnhome price was $164,100 in November, down 4.0 percent from a year ago and the median existing condo price was $164,600, 0.2rnpercent below a year earlier.  </p

There were 2.58 million housingrnunits for sale at the end of the period, down 5.8 percent from October.  This is a 7.0 month supply at the currentrnsales pace compared to a 7.7 month supply in October.  Lawrence Yun, NAR Chief Economists said,rn”Since setting a record of 4.04 million in July 2007, inventories have trendedrndown and supplies are moving close to price stabilization levels.” </p

Thirty-five percent of sales duringrnthe month were to first-time homebuyers, up from 34 percent in October and 32rnpercent in November 2010.  Investorsrnaccounted for 19 percent of transactions, little changed from either October orrna year earlier.  All-cash sales accountedrnfor 28 percent of purchases in November; they were 29 percent in October and 31rnpercent in November 2010.  Investors make up the bulk of cashrntransactions.</p

Yun said more people arerntaking advantage of the buyer’s market.  “Sales reached the highest markrnin 10 months and are 34 percent above the cyclical low point in mid-2010 – arngenuine sustained sales recovery appears to be developing,” he said. rn”We’ve seen healthy gains in contract activity, so it looks like more peoplernare realizing the great opportunity that exists in today’s market for buyersrnwith long-term plans.”</p

A high level of contractrnfailures continued in November. rnThirty-three percent of NAR members reported having at least one inrnNovember, the same as October but significantly above the 9 percent reportedrnone year ago.  Contract failures are cancellations caused by declinedrnmortgage applications, failures in loan underwriting from appraised valuesrncoming in below the negotiated price, or other problems including lowerrnconforming mortgage loan limits, home inspections and employment losses.</p

Sales were uprnin every region on both a month-over-month and annual basis.  The figures for the two periods were:  </p<table border="1" cellpadding="0" cellspacing="0"<tbody<tr<td valign="top" width="114"</td<td valign="top" width="150"

Nov. Sales Pace</p</td<td valign="top" width="144"

Chg from Oct 2011</p</td<td valign="top" width="156"

Chg from Nov. 2010</p</td</tr<tr<td valign="top" width="114"

Northeast</p</td<td valign="top" width="150"

560,000</p</td<td valign="top" width="144"

9.8</p</td<td valign="top" width="156"

7.7</p</td</tr<tr<td valign="top" width="114"

Midwest</p</td<td valign="top" width="150"

960,000</p</td<td valign="top" width="144"

4.3</p</td<td valign="top" width="156"

15.7</p</td</tr<tr<td valign="top" width="114"

South</p</td<td valign="top" width="150"

1,740,000</p</td<td valign="top" width="144"

2.4</p</td<td valign="top" width="156"

12.3</p</td</tr<tr<td valign="top" width="114"

West</p</td<td valign="top" width="150"

1,160,000</p</td<td valign="top" width="144"

3.6</p</td<td valign="top" width="156"

11.5</p</td</tr</tbody</table

Regionally, medianrnprices were all lower than one year ago. rnIn the Northeast the price was down by 0.1 percent to $240,000 and the medianrnprice in the Midwest, $133,400, was 4.0 percent lower.  In the South the price was $143,300, down 2.1rnpercent and in the West the price was $195,300, down 8.4 percent.

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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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