NAR: ‘Home Sales Are Bottoming Out’

February 21, 2023 By: Melissa Dittmann Tracey

Spring is around the corner, and the signs are pointing to a pick-up in sales on the horizon. Read more from NAR’s latest housing report.

saleswoman greeting female customers while standing outside house

Existing-home sales continued to ease in January, marking a yearlong stretch of declines coming off pandemic-fueled highs. But median home prices still are rising.

Total existing-home sales—completed transactions that include single-family homes, townhomes, condos and co-ops—decreased 0.7% in January compared to December 2022, the National Association of REALTORS® reported Tuesday. Home sales are down nearly 37% compared to a year earlier (at a seasonally adjusted annual rate of 4 million in January).

But as mortgage rates begin to stabilize, economists are hopeful for a turnaround in sales activity for the housing market heading into spring.

“Home sales are bottoming out,” says Lawrence Yun, NAR’s chief economist. “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”

Overall, the median existing-home sales price nationwide rose 1.3% compared to a year ago, reaching $359,000, NAR reports. Home prices climbed in three out of the four major regions of the U.S., only falling in the West last month.  

The supply of homes for sale continues to be tight in most markets across the country, helping to keep home prices higher. Still, total housing inventory rose 2.1% in January month-over-month and is up by 15.3% compared to a year ago. Unsold inventory, remains, at a brisk, 2.9-month supply at the current sales pace.

“Inventory remains low, but buyers are beginning to have better negotiating power,” Yun says. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”

Here’s a closer look at other key indicators from NAR’s latest housing report:
Days on the market: Fifty-four percent of homes sold in January were on the market for less than a month in January. On average, properties remained on the market for 33 days in January, up from 26 days in December and 19 days a year earlier.
First-time home buyers: As competition lessens, first-time home buyers are re-emerging. First-time buyers accounted for 31% of sales in January, up from 27% a year earlier.
All-cash sales: All-cash transactions comprised 29% of sales in January, up from 27% in January 2022. Individual investors and second-home buyers tend to make up the biggest bulk of all-cash sales. They purchased 16% of homes in January, down from 22% a year earlier.
Distressed sales: Foreclosures and short sales continue to make up a very small share of sales. Distressed sales accounted for 1% of sales in January, matching levels from a year earlier.
 
Regional Snapshot
Here’s how existing-home sales fared across the country in January:

  • Northeast: Existing-home sales fell 3.8% from December, reaching an annual rate of 500,000 in January. Sales were down nearly 36% from a year earlier. Median price: $383,000, up 0.3% from January 2022
  • Midwest: Sales decreased 5% compared to the previous month, reaching an annual rate of 960,000 in January. Sales were down 33.3% from one year ago. Median price: $252,300, up 2.7% from January 2022
  • South: Sales rose 1.1% in January compared to December, reaching an annual rate of 1.82 million. Sales are down nearly 37% from the prior year. Median price: $332,500, an increase of 3.4% from one year ago
  • West: Existing-home sales increased 2.9% in January, reaching an annual rate of 720,000, but still down 42.4% from the previous year. Median price: $525,200, down 4.6% from January 2022

Weekly Housing Market Update -2/17/2023

This week, Chief Economist Danielle Hale discusses what small business optimism, consumer and producer inflation data, and retail sales data signal about the U.S. economy. She also highlights what these data imply for the Fed’s likely path forward.

0:10 – Business optimism trends
0:25 – Inflation trends
1:24 – Mortgage rates
1:40 – Construction trends
2:11 – Real estate listings trends


Yes, You Should Buy a House This Year

family on front porch of house holding sold sign

FEBRUARY 6, 2023

By Brian O’Connell

Buyers who wait for more inventory, lower interest rates or something else may never own a home. And given history, 2023 is a pretty good year to commit.

McDONOUGH, Ga. – Mortgage rates are finally falling across the fruited plains, with rates in the 5.6% range for a 30-year fixed mortgage not uncommon in early February. Couple that with declining home prices and an uptick in the residential real estate inventory, and it looks like the great American homebuyer finally has leverage after two years of home sellers calling the shots.

“2023 will be better for buyers,” said Magellan Realty LLC mortgage broker Alex Caras. “As the Federal Reserve keeps interest rates at the current levels, the buying market will start to open up more, reducing competition for existing homes.”

Construction woes brought on by the supply chain issues are also being eased, “so more new homes will be on the market,” Caras added.

Buyers getting an edge

Those are the macro reasons why U.S. homebuyers have a leg up going into the busy spring and summer real estate season. Buyers should have an edge thanks to these five realities, as well.

1. Mega-high prices are a thing of the past. “The price climbing we saw in 2020 and 2021 has hit a plateau,” said Guaranteed Rate Mortgage Senior Vice President of Lending Jennifer Beeston. “It took a good chunk of 2022 for many sellers to realize 2021 is long gone and they needed to be more realistic with the pricing and condition of their home.”

In addition, buyers see a return to a more balanced market in 2023. “Now, buyers actually can get inspections and can negotiate prices,” Beeston said. “That wasn’t the case with the drama of 2022.”

2. The Federal Reserve is hitting the brakes. The U.S. Federal Reserve is slowing down its policy of substantial interest rate increases that were prevalent in 2022.

“This means more buyers will be able to purchase a home at a lower rate,” Caras told TheStreet. “Home prices have been reduced to a more reasonable level as well, and this will continue for much of 2023 as the competition to purchase homes has lessened.”

3. The pandemic is over. Buyers will have an opportunity to negotiate again in 2023 and even more so in 2024.

“We’re likely going to see some distressed sales and sellers will need to become more realistic,” said Pulse International Realty founder Rena Kliot. “The spike in home prices is not sustainable and was in direct correlation to the pandemic. During the dark days of the pandemic, there were many desperate and emotional purchases.”

4. Changing residential market tastes. While single-family homes will continue to be popular, the U.S. condo market will return in full swing.

“Life as we knew it seems to be returning and that is drawing people back to urban dwelling – especially with condo living,” Kliot said. “Condo prices are now also more affordable or negotiable than single-family residences.”

5. Strong signals from the stock market. Across the U.S., there seems to be a general sigh of relief the worst has passed.

“Inflation has peaked, interest rates have peaked, and home prices have peaked for now,” said Elegran Real Estate managing director Jared Antin. “The stock market – notably the tech-heavy NASDAQ – has seen a significant rebound thus far in 2023, which instills a certain level of confidence in the consumer.”

The falling market through much of 2022 had the opposite effect, reducing consumer appetite for a new home with rising interest rates and inflation.

“Now, a more positive consumer base will help fuel a rebounding real estate market,” Antin noted.

One of the most important things a would-be home buyer should do right now is to stay hopeful and be prepared.

“Don’t assume that just because you’re having trouble finding a home now, or can’t afford a house at today’s rates, that you’ll never be a homeowner,” LendingTree senior economist Jacob Channel. “If you have patience and are willing to compromise on some things, like how many bathrooms your house needs to have or what specific neighborhood you require, you can make your dream of homeownership a reality.”

Additionally, being prepared financially when a good deal arises is critical right now.

“Be diligent about saving money and make all of your monthly payments on time to protect your credit,” Chanel told TheStreet. “Also, shop around and compare mortgage offers from different lenders or look into different mortgage loan programs – like FHA or USDA backed loans – so you can make the home buying experience more affordable.”

Copyright © 2023 Henry Daily Herald. All rights reserved.


At 6.14%, Weekly Mortgage Rates Hit Sept. Lows

Back of man starting at huge dollar bill with arrow in front heading lower

JANUARY 19, 2023

It’s down from last week’s 6.33%. Freddie Mac’s chief economist says it provides a “much-needed boost” for the housing market, but inventory is a concern.

Copyright 2023 The Associated Press. All rights reserved.

WASHINGTON (AP) – The average long-term U.S. mortgage rate fell this week to its lowest level since September, a potential boost to the housing market which has been in decline for nearly a year.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate fell to 6.15% from 6.33% last week. A year ago the average rate was 3.56%.

The average long-term rate reached a two-decade high of 7.08% in the fall as the Federal Reserve continued to boost its key lending rate in its quest to cool the economy and tame inflation.

The big rise in mortgage rates during the past year has throttled the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.

Though home prices have retreated as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable for many people, but recent rate declines could give some homebuyers new hope.

“Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”

At its final meeting of 2022, the Federal Reserve raised its rate 0.50 percentage points, its seventh increase last year. That pushed the central bank’s key rate to a range of 4.25% to 4.5%, its highest level in 15 years.

Though inflation at the consumer level has declined for six straight months, Fed officials have signaled that they may raise the central bank’s main borrowing rate another three-quarters of a point in 2023, which would be in a range of 5% to 5.25%.

Rates for 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.

The rate for a 15-year mortgage, popular with those refinancing their homes, also declined this week, to 5.28% from 5.52% last week. It was 2.79% one year ago.


NAR: 3Q Home Prices Up in 98% of Metros

By Kerry Smith -NOVEMBER 11, 2022

Home prices rose 8.6% in 3Q, with 46% of metros seeing double-digit price growth – a drop from 80% in 2Q. Of the top 10 high-price-increase metros, 7 are in Fla.

WASHINGTON – An overwhelming majority of metro markets saw home price gains in the third quarter of 2022, according to the National Association of Realtors® (NAR). That increase was in spite of rising mortgage rates that approached 7% and declining sales.

Of the 185 metros NAR tracks, 46% had double-digit price increases, though that’s down from 80% in the second quarter.

The national median single-family existing-home price climbed 8.6% year-to-year to $398,500. While still a notable price increase, it’s down from the 14.2% recorded in the previous quarter.

“Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising,” says NAR Chief Economist Lawrence Yun. “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic back in 2019.”

Among the major U.S. regions, the South registered the largest share of single-family existing-home sales (44%) and the greatest year-over-year price appreciation (11.9%) in the third quarter. Prices were up 8.2% in the Northeast, 7.4% in the West, and 6.6% in the Midwest.

Fla. has 7 of top 10 metros for price growth

  1. North Port-Sarasota-Bradenton – 23.8%
  2. Lakeland-Winter Haven – 21.2%
  3. Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. – 21.1%
  4. Panama City – 20.5%
  5. Deltona-Daytona Beach-Ormond Beach – 19.6%
  6. Port St. Lucie – 19.4%
  7. Greenville-Anderson-Mauldin, S.C. – 18.9%
  8. Kingsport-Bristol-Bristol, Tenn.-Va. – 18.8%
  9. Tampa-St. Petersburg-Clearwater – 18.8%
  10. Ocala (18.8%

10 most expensive markets in the U.S.

  1. San Jose-Sunnyvale-Santa Clara, Calif. – $1,688,000; 2.3%
  2. San Francisco-Oakland-Hayward, Calif. – $1,300,000; -3.7%
  3. Anaheim-Santa Ana-Irvine, Calif. – $1,200,000; 9.1%
  4. Urban Honolulu, Hawaii – $1,127,400; 7.6%
  5. San Diego-Carlsbad, Calif. – $900,000; 5.9%
  6. Los Angeles-Long Beach-Glendale, Calif. – $893,200; 3.8%
  7. Boulder, Colo. – $826,900; 7.5%
  8. Naples-Immokalee-Marco Island – $746,600; 16.7%
  9. Seattle-Tacoma-Bellevue, Wash. – $741,300; 4.6%
  10. Boston-Cambridge-Newton, Mass.-N.H. – $698,900; 6.2%

“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun says. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”

Higher cost for monthly payments

In the third quarter of 2022, stubbornly high home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840. That’s a marginal increase from the second quarter ($1,837) but a significant year-to-year jump of $614 – or 50%.

Families typically spent 25% of their income on mortgage payments, down from 25.3% in the prior quarter, but up from 17.2% one year ago.

“A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rates down to around 6%,” Yun says. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”

First-time buyer challenges

First-time buyers looking to purchase a typical home during the third quarter of 2022 continued to feel the impact of housing’s growing unaffordability. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 – nearly identical to the previous quarter ($1,807) but an increase of almost $600 (49%), from one year ago ($1,210).

First-time buyers typically spent 37.8% of their family income on mortgage payments, up from 36.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 59 markets, up from 53 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 17 markets, down from 23 in the previous quarter.

© 2022 Florida Realtors®


Real Estates Current Market Silver Lining

For those looking for the good news about today’s real estate market. A bit of a deep dive, about 60 minutes worth but excellently delivered. Three main facts tell us it’s not all doom and gloom. Combine them with the time of year and the general fear that has most buyers/sellers on the sidelines, spells opportunity. (40:00). We can help should you decide to take advantage of today’s market.

  • Historical trends, what happens after quantitative tightening (12:00)
  • Demographics, there’s a lot of millennials (24:50)
  • Inventory levels, yes they are still historically low (22:00)


Weekly Market Report: Week Ending Oct. 16

Access this weekly report for real-time data on residential market activity across the Bright MLS footprint.
October 17,  2022 Lisa Sturtevant, PhD

Here are the highlights for the week ending October 16, 2022:

  • Inventory continues to increase throughout the Bright footprint. The average number of active listings during the week ending October 16 was up 17.5% compared to the same week a year ago. Active listings edged up 0.9% compared to last week, which is the second weekly increase in a row. Despite these increases, overall supply across the region remains very low.
  • Market activity is still below 2019 levels as buyers and sellers continue to remain on the sidelines. On the buyer side, both closed sales and new purchase contracts were down significantly compared to last year at this time and were even lower than before the pandemic. Closed sales this week were about 14% lower than the same week during 2019, while the number of new purchase contracts tracked 22% lower than during the same week in 2019.
  • There was a slight uptick in both new purchase activity and new listings compared to a week ago. Typically, both the number of new purchase contracts and new listings decline during the second week of October. This year, however, there were slight increases, with new purchase contracts 2.1% higher than a week ago and new listings up 3.0% week-to-week. These weekly increases could indicate some buyers and sellers are starting to act in anticipation of higher mortgage rates later this fall.
  • Homes are still selling relatively quickly. The median days on market was 15 during the week ending October 16, which is up four days compared to last year and is one day longer than a week ago. The median days on market is still much lower than 2019, when homes typically took 25 days to sell.

Scott Bradley Brixen – ListReports Blog

Real Estate News

Interest rates for the average 30-yr, fixed-rate mortgage according to Freddie Mac’s PMMS hit:

4% in March 😟
5% in April 😰
6% in early-September 😨
7% (well, almost) in late-September 😱

The slowdown continues, but we have yet to see the impact of the most recent (massive) jump in mortgage rates on homebuyer demand.

August existing home sales dropped for the 7th straight month. Price growth decelerated further to “just” 8% YoY. [Source: Realtor.com]

Meanwhile, pending sales for August dropped 2% MoM and 24% YoY. The NAR now forecasts existing home sales to fall 15% YoY in 2022, with new home sales down 21% YoY. [Source: NAR]

Case-Shiller Index

Home price growth slowed to 15.8% YoY in July, from 18.1% YoY in June. That may not seem like much, but it’s the biggest 1-month drop in the index’s history.

Case-Shiller is the gold standard for home price appreciation because it tracks the sales prices of very similar homes across 20 big cities. It’s an ‘apples to apples’ comparison. But that accuracy comes at a cost…the data is 2 months old by the time we get it.

Mortgage Market

An extremely volatile week for the bond market (after the Fed raised rates 75bps) saw 30-year, fixed-rate mortgages briefly exceed 7% [with no points], before dropping back to around 6.75%. [Source: Mortgage News Daily]

Freddie Mac’s closely watched PMMS survey saw the interest rate on the average 30-year, fixed-rate mortgage climb to 6.7%. Keep in mind that this figure includes an average 0.9 points purchased. Without those points, the rate would have been at/ahead of 7%.

Still a Seller’s Market

Demand is falling and inventory has risen, but in most markets, well-priced homes are still selling very, very quickly.

In fact, the average Days on Market for sold properties has only edged up from 14 (in June & July) to 16 in August. In 2011 that figure was 96! Looked at another way, 81% of homes sold in August had been on the market less than a month.

That said, the average number of offers received for each property sold has plunged from a frenzied 5.5 in April 2022 to 2.5 in August. That’s actually getting pretty close to “normal” pre-pandemic levels of competition.

National Housing Stats

They Said It

“Success demands singleness of purpose. You need to be doing fewer things for more effect instead of doing more things with side effects. It is those who concentrate on one thing at a time who advance in this world.” — Gary Keller, The One Thing

“Our house is clean enough to be healthy and dirty enough to be happy” — Robyn Griggs Lawrence

Inspiration

The average duration of homeownership in the US is around 12 years. So if someone in your sphere of influence (SOI) bought a home in the last few years, there’s no reason to actively stay in touch with them, right? Wrong. Take the inverse of 12 (that’s 1/12) and you get 8.3%.

This means that, mathematically, 8% of your SOI is going to move in the next year…for reasons that you (and often they) couldn’t have predicted. Hockey legend Wayne Gretzky said “you miss 100% of the shots you don’t take.” In real estate, you probably lose 80–90% of the past clients that you don’t stay in contact with.



How Homeownership Can Help Shield You from Inflation

How Homeownership Can Help Shield You from Inflation | MyKCM

If you’re following along with the news today, you’ve likely heard about rising inflation. You’re also likely feeling the impact in your day-to-day life as prices go up for gas, groceries, and more. These rising consumer costs can put a pinch on your wallet and make you re-evaluate any big purchases you have planned to ensure they’re still worthwhile.

If you’ve been thinking about purchasing a home this year, you’re probably wondering if you should continue down that path or if it makes more sense to wait. While the answer depends on your situation, here’s how homeownership can help you combat the rising costs that come with inflation.

Homeownership Offers Stability and Security

Investopedia explains that during a period of high inflation, prices rise across the board. That’s true for things like food, entertainment, and other goods and services, even housing. Both rental prices and home prices are on the rise. So, as a buyer, how can you protect yourself from increasing costs? The answer lies in homeownership.

Buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost. If you get a fixed-rate mortgage on your home, you lock in your monthly payment for the duration of your loan, often 15 to 30 years. James Royal, Senior Wealth Management Reporter at Bankrate, says:

A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.” 

So even if other prices rise, your housing payment will be a reliable amount that can help keep your budget in check. If you rent, you don’t have that same benefit, and you won’t be protected from rising housing costs.

Use Home Price Appreciation to Your Benefit

While it’s true rising mortgage rates and home prices mean buying a house today costs more than it did a year ago, you still have an opportunity to set yourself up for a long-term win. Buying now lets you lock in at today’s rates and prices before both climb higher.

In inflationary times, it’s especially important to invest your money in an asset that traditionally holds or grows in value. The graph below shows how home price appreciation outperformed inflation in most decades going all the way back to the seventies – making homeownership a historically strong hedge against inflation (see graph below):

How Homeownership Can Help Shield You from Inflation | MyKCM

So, what does that mean for you? Today, experts say home prices will only go up from here thanks to the ongoing imbalance in supply and demand. Once you buy a house, any home price appreciation that does occur will be good for your equity and your net worth. And since homes are typically assets that grow in value (even in inflationary times), you have peace of mind that history shows your investment is a strong one.

Bottom Line

If you’re ready to buy a home, it may make sense to move forward with your plans despite rising inflation. If you want expert advice on your specific situation and how to time your purchase, let’s connect.