Existing-home sales declined against a backdrop of an eroding economy, according to the National Association of Realtors (NAR).
Existing-home sales — including single-family, townhomes, condominiums and co-ops — fell 8.6 percent to a seasonally adjusted annual rate of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007.
Lawrence Yun, NAR chief economist, expected a decline. “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level. We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.09 percent in November from 6.20 percent in October; the rate was 6.21 percent in November 2007. In December, Freddie Mac reported the 30-year rate fell to 5.19 percent — the lowest on record since the series began in 1971.
Total housing inventory at the end of November rose 0.1 percent to 4.20 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.3-month supply in October.
Despite an overall softening in sales, there has been a solid trend of rising activity in California, Nevada, Arizona and Florida markets. “Sales are rising only in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices,” Yun said.
Single-family home sales fell 8.0 percent to a seasonally adjusted annual rate of 4.02 million in November from a level of 4.37 million in October, and are 8.8 percent below a 4.41 million-unit pace a year ago. The median existing single-family home price was $180,800 in November, down 12.8 percent from November 2007.
Regionally, existing-home sales in the Northeast dropped 12.0 percent to an annual pace of 730,000 in November, and are 18.0 percent lower than a year ago. The median price in the Northeast was $257,700, down 0.1 percent from November 2007.
Existing-home sales in the Midwest fell 7.4 percent in November to a pace of 1.00 million and are 16.0 percent below November 2007. The median price in the Midwest was $142,400, down 11.2 percent from a year ago.
In the South, existing-home sales dropped 10.9 percent to an annual pace of 1.64 million in November, and are 17.6 percent below a year ago. The median price in the South was $154,500, which is 10.6 percent lower than November 2007.
Existing-home sales in the West declined 4.3 percent to an annual rate of 1.12 million in November but are 17.9 percent higher than November 2007. The median price in the West was $242,500, down 25.5 percent from a year ago.
Loan Applications Double
According to loans originated in December 2008 by Rodney Anderson, the country’s fourth highest producing originator of mortgage loans and the highest producing originator of FHA and VA loans, new mortgage activity doubled when compared to loan activity from December 2007. Seventy percent of December’s new loan applications were for purchases of residential property.
“There’s no question that as rates dropped in the latter part of 2008 more people took steps to capitalize on the cost savings that those lower rates would bring,” says Anderson. “And while many see this as a refinance boom, it’s important to note that a significant portion of those loans — roughly seven out of ten — were going to individuals purchasing new homes. Despite the stagnation we’re hearing about in the retail and automotive sector, there are still individuals out there who are buying homes and taking advantage of lower rates in this buyer’s market.”
S&P/Case-Shiller Indices Decline
Prices of existing single-family homes across the United States show continued broad-based declines, with 14 of the 20 metro areas showing record rates of annual decline and 14 now reporting declines in excess of 10 percent versus October 2007, according to Standard & Poor’s Case-Shiller Home Price Indices. The indices reflect data through October 2008. Home prices are back to their March 2004 levels, says David M. Blitzer, chairman of the Index Committee at Standard & Poor’s.