Continue Reading March 23rd, 2009
The stock market jumped today as home sales as more homes got sold than expected in February. The National Association of Realtors reports that sales of existing homes—including condos–rose at a rate of 5.1% in February from the previous month. The median price of a single-family home nationally was $164,000, down 3% from January and 15% from February of last year.
Foreclosures and other distressed transactions made up 45% of sales nationally. The inventory of homes for sale climbed, but the time it will take the sell a homes based on current sales trends stayed flat at 9.7 months.
“Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price,” said the Realtors’ chief economist Lawrence Yun.
Sales climbed highest in the Northeast at 15.6 percent. But other regions of the country also did better than expected. “Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years,” Yun said.
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Continue Reading March 23rd, 2009
Home sales, on a seasonally-adjusted basis, rose an unexpected 5.1% in February compared to January (Though home sales were down 4.6% compared to a year earlier), the National Association of Realtors said March 23.
But the monthly increase might be little more than statistical noise. It might be that the slightly warmer-than-usual February brought out some more buyers, said Patrick Newport, U.S. Economist for HIS Global Insight. But the formula used to adjust data for seasonal buying patterns tends to exaggerate monthly irregularities, he said.
The home sale increase was surprising given that January “pending home sales,” a leading indicator because that contracts are typically signed a couple months before closing, actually dropped 7.8%.
The median existing home price was down 15.5% from a year earlier. Prices are falling quickly, in part, because 40% to 45% of transactions nationwide are foreclosures or short sales. The mix of homes that are selling has also changed in recent months. First-time buyers make up half the market and tend to buy less-expensive houses. Home sales in luxury markets have slowed to a trickle.
First American CoreLogic also came out with a report March 23 that said that Rhode Island edged out Florida in January as the fourth worst market in the country in terms of annual price depreciation (Prices fell 19.7% in Rhode Island and 19.5% in Florida). The five worst markets were: Nevada, California, Arizona, Rhode Island, Florida, according First American CoreLogic’s Home Price Index report.
Rhode Island has been in the top five or six worst markets for many months but Mark Fleming, chief economist for First American CoreLogic, said Rhode Island’s move into the top 4 is just a “blip.” He expects Florida to retake the spot when the February report is released.
Rhode Island real estate market was battered by a heavy concentration of subprime mortgages and second homes owned by vacationers and investors. Prices consistently increased during the boom by double digits and are now falling fast. The recession has only made matters worse, as the tiny state loses manufacturing jobs.
Paul Leys, president of the Rhode Island Association of Realtors and broker/owner Gustave White Sotheby’s International Realty, said foreclosure-related sales now make up a large portion of the market and need to be flushed out of the system. The median home price of about $230,000 has dropped back down to 2003 levels, Leys said.
“We’re getting lot of press with negative numbers coming out,” Leys said. “Prices went up so high during the good times. It was bound to correct itself sooner or later.”
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