Home Contracts Drop 16% in November
After 9 months of growth, homebuyers signed lesser contracts this November. According to a report released by the National Association of Realtors, the Pending Home Sales index dropped by 16 percent way above the 2 percent decline projected.
The drop in new home contracts were largely attributed to the slated end of the government’s hugely popular $8,000 Tax Credit Program. Scheduled to end on December 1, the program has since been extended to spring of this year.
Increases seen prior to November’s skip were due to homebuyers scrambling to avail of the Tax Credit program. The program was largely responsible for the increase in new home sales that homeowners specifically asked their mortgage providers that no deals were to push through if the Tax Credit was not included in their contract.
With the government extending the program to June, homebuyers were able to breathe a sigh of relief as sentiments reflected a wait and see attitude. Home sales are traditionally weaker in the winter months and numbers are adjusted accordingly.
“It will be at least early spring before we see notable gains in sales activity as homebuyers respond to the recently extended and expanded tax credit,” Lawrence Yun (NAR chief economist).
The Pending Home Sales index is a good gauge for predicting future home market movements. Home contracts are processed an average of six weeks to months before being finalized. This numbers could influence the final number of future homesales and is a good indicator where markets are headed.
Figures also showed that the Northeast and Midwest were the hardest hit areas with some parts registering a 26 drop in November. Other areas also reported seasonally adjusted drops with the South falling 15 percent and the West’s 3 percent dip from the previous month.
In year to year comparison, November’s numbers are still higher. This has left some analysts positive that the sudden dip in home contracts are just a bump on the road and the figures are still better than expected.
With the economy emerging from the economic crisis, economists are hopeful that the green shoots of recovery are not compromised with the withdrawal of support from government programs.
Reported by REOProteams
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Home Values post 5th Straight Monthly Growth in October
For the fifth straight month, home values across the nation rose but only 11 of the 20 metro areas surveyed showed significant improvement. Home prices were up 3.4 percent from May when they were at their lowest. However, not all cities surveyed showed the same significant increases.
Home prices continue to rise in Denver, Minneapolis, San Francisco and Washington areas for the six consecutive month. Although numbers from Chicago, Florida and the Tampa areas did not fare well and were down by as much one percent from September’s numbers. News from Las Vegas remains bleak as home prices continue their downward spiral as values have seen their prices cut by almost 56 percent from previous highs.
“I’d be very surprised if we don’t go below the lows we hit this year,” Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington think tank. “We still have a very glutted housing market.”
Home values have been steadily gaining since summer with widespread consumer interest in new home purchases. The hugely popular $8,000 Tax Credit program helped spark interest in new home sales and drove home market values up. The program which was originally slated to end November 30 last year was extended to April 30 of this year.
The Consumer Index also rose to 52.9 up from 50.6 this December according to the Conference Board released report this Tuesday. The hike in home value signals increasing consumer confidence and their willingness to increase spending. This, as they feel their values rise with their home values increasing.
Housing Woes
Negative equity still plagues many homeowners across the country. Recent gains in home prices have not been enough in pulling homeowners away from negative equity. The drop in home prices has seen homeowners owing their banks more than their houses are worth.
More problems loom in the horizon as economist predict that home values would dip much, much lower this coming winter months. The housing index dropped a further 7.3 percent from last year’s October numbers, a figure matching what economists largely expected this quarter.
More woes for the housing sector as housing numbers are expected to drop. Winter months are historically not good for home sales and construction. Funds for mortgage refinancing and supporting housing reforms are also expected as government programs wind down.
Reported by REOProteams
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Home Sales Surge at its Highest Level in 2 years
Home sales reached its greatest levels this October as homeowners tried to take advantage of the government’s Tax Credit program formerly scheduled to end this November. This marks the second month in a row that home sales had a strong showing as new homeowners try to grab homes and take advantage of the ending Tax Credit program.
Surprising numbers
Home sales rose by 10.6 percent to seasonally adjusted numbers of 6.1 million units up from the 5.54 million units set this September according to the National Association of Realtors. This represent an increase over the projected 5.7 million units for October and eclipsing the 4.94 million units sold a year ago.
This also represents the greatest number of home sales in a month only surpassed by the 6.6 million units posted 2 and a half years ago. Figures were also 23.5 percent higher than October of last year.
Home sales across the country were up 36 percent for January of this year’s figures. The continuing rise in home sales nationwide has investors hoping that the worst of the housing crisis may be over.
According to reports published by the National Association of Realtors, sale of existing homes also rose by 10.1 percent as homebuyers try to take advantage of the influx of large numbers of foreclosed homes being offered at bargain prices.
Home sales across the country continue their rebound with home sales posting strong numbers across all regions. Sales posted their biggest increase in the Midwest region with its 26 percent. This was closely followed by the 25 percent in the Northeast and the South’s 23 percent. The West continues to lag behind but managed to post a 10 percent increase.
Sales continue to strengthen across all sectors especially in the sale of previously owned homes. There has been a continuing strong demand for these homes that analysts have placed the supply of homes at 7 months.
Falling prices
Home prices continue to drop as more homeowners are forced into foreclosure. These as home prices have considerable dropped by as much as 20 percent nationwide since the collapse of the home market. Prices are again expected to drop lower this spring as more homes fall into foreclosure.
Home sales are also expected to drop this season as the winter season is historically lean months for home purchases. The Mortgage Bankers Association announced last week that 14 percent of homes are in danger of foreclosure or in danger of defaulting.
The median prices of homes sold this October stood at $173,000 a 7.1 percent skid from last year’s prices. Foreclosed homes also continue to make up a great portion of home sales registering 30 percent of the total. This however marks a sharp improvement as majority of homes sales in the past months were previously owned homes.
Reported by REOProteams
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Bargain Homes: To buy or not to buy
With homes at incredibly low prices and mortgage rates at their lowest in decades more and more homeowners are finding this to be the best times to own a house. In a report made by the National Association of Home Builders, it was found out that almost 70% of homes being sold today could be owned by the average American family.
The average American family earns around $64,000 per year making them eligible for buying 70% of homes in the market. Huge unemployment rates large numbers of foreclosures have driven home values almost 20% below national averages last year.
Continuing foreclosures brought about by today’s economic difficulties have left real estate companies with large inventories of unsold homes. This in turn has driven home values down as real estate firms clear their inventories by pushing homes at bargain prices.
Buying a Home
Low Mortgage Rates
Mortgage rates continue to hover below the 5% mark, making monthly mortgage payments the most affordable in years. This year has seen mortgage rates drop to their lowest in decades and April’s numbers placed them at all-time record lows. Mortgage rates for 30 Yr Fixed loans stood at 4.83% or a few percentage points from last week’s 4.91%.
Rates for 30 Yr Fixed Loans which makes a great portion of all mortgage plans continue to slide as the FED continue to pump in dollars keeping mortgage rates down. Government measures like the “Making Homes Affordable Program” have helped millions of homeowners in danger of foreclosure by refinancing their mortgage.
Bargain Prices
The average home prices nationwide are down 20% from last year’s figures. Homes in some places hardest hit by the Home Market’s meltdown has seen the brunt of the huge price drops. Some homes have even been sold at fractions of their market values a year ago.
In an initiative to stop the sorry state which some foreclosed homes has been left, the government has given homeowners incentives for rebuilding these properties. Fannie Mae in an announcement earlier this month said it was offering homeowners who have lost their homes the Dead for Lease Program. This aims to curb the destruction of foreclosed homes as distraught homeowners leave.
Low national averages however do not transform into home sales as other factors also contribute to actual home purchases. Detroit remains to be one of the most affordable metro cities with the average home price pegged at $84,000. Other factors such as unemployment and low monthly wages on the other hand have not helped in home purchases.
Home of previously owned homes still lead all home purchases. Recent purchases of foreclosed homes have helped cut the number previously owned homes in the market. Strong sales in this area however have not been reflected in other sectors of the real estate market such as condominiums and multiple housing units.
Tax Credit Program
With the extension of the government’s hugely popular Tax Credit Program, home sales are again expected to rise. This program continues to be the main driving force in the upsurge of home sales. The Tax Credit Program has also opened markets which were previously out of the reach of prospective homeowners.
Bargain prices, low mortgage rates and the Tax Credit program are the three main reasons why home sales continue to post strong numbers. Gains in the Real Estate environment might be short lived however if any of these factors are changed.
October saw the first drop in home starts in months. This reflects the uncertainty felt by both homeowners and real estate industry with the looming tax credit programs scheduled withdrawal this November. With full economic recovery still in the distant future, all three factors must be present if improvements in the fledging housing industry are to continue.
Reported by REOProteams
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