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Existing Home Sales Ease Nationally While Growth is Seen Regionally
May 19, 2011

Existing-home sales slipped in April, although the market has managed six gains in the past nine months, according to the latest report from the National Association of Realtors (NAR). Existing-home sales, defined as completed transactions that include single-family, townhomes, condominiums and co-ops, eased 0.8 percent to a seasonally adjusted annual rate of 5.05 million in April from a downwardly revised 5.09 million in March, and are 12.9 percent below a 5.80 million pace in April 2010; sales surged in April and May of 2010 in response to the first-time homebuyer tax credit. “Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger,” said Lawrence Yun, NAR chief economist. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.” A parallel NAR practitioner survey shows that 11 percent of NAR members report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal. "Arizona homebuyers are finding the cost of ownership is often less expensive than rent," said Derek Egeberg of and branch manager of Academy Mortgage Corporation in Yuma, Ariz. "Buyers who can show the standard income, asset and employment information to prove income are having no problems in acquiring a mortgage. Locally, we have experienced an increase in buyer activity, both with applications and purchase contracts." According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in April, unchanged from March; the rate was 5.10 percent in April 2010. All-cash transactions stood at 31 percent in April, down from a record level of 35 percent in March; they were 26 percent in March 2010; investors account for the bulk of cash purchases. "We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. The national median existing-home price for all housing types was $163,700 in April, approximately five percent below April 2010's average. Distressed properties typically sold at a discount of about 20 percent and accounted for 37 percent of sales in April, down from 40 percent in March; they were 33 percent in April 2010. "We are seeing bank-owned and short sales with a sprinkling of regular contracts," said Van Johnson, CMC from My Mortgage Company in DeLand, Fla. "If there is any equity they are listed, sold and moving." Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply at the current sales pace, up from an 8.3-month supply in March. First-time homebuyers purchased 36 percent of homes in April, up from 33 percent in March; they were 49 percent in April 2010 when the first-time homebuyer tax credit was in place. Investors slipped to 20 percent in April from 22 percent of purchase activity in March; they were 15 percent in April 2010. The balance of sales was to repeat buyers, which were 44 percent in April. Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.42 million in April from 4.44 million in March, and are 12.6 percent below the 5.06 million pace in April 2010. The median existing single-family home price was $163,200 in April, which is 5.4 percent below a year ago. Existing condominium and co-op sales fell 3.1 percent to a seasonally adjusted annual rate of 630,000 in April from 650,000 in March, and are 15 percent below the 741,000-unit level one year ago. The median existing condo price was $167,300 in April, down 2.3 percent from April 2010. Regionally, existing-home sales in the Northeast fell 7.5 percent to an annual pace of 740,000 in April and are 32.1 percent below a year-ago surge. The median price in the Northeast was $225,400, which is 7.3 percent below April 2010. Existing-home sales in the Midwest rose 5.7 percent in April to a level of 1.12 million but are 16.4 percent below a cyclical peak in April 2010. The median price in the Midwest was $133,200, down 5.1 percent from a year ago. In the South, existing-home sales declined 1.0 percent to an annual pace of 1.95 million in April and are 9.3 percent below a year ago. The median price in the South was $142,800, which is 4.1 percent lower than April 2010. "What I am seeing is that national numbers have no reflection on personal numbers," said Tim Davis, sales, marketing and leadership trainer and speaker with "I know agents and loan officers who are doing extremely well because they put themselves right smack dab in the way of opportunity. The purchase money business in my area in Nashville is doing very well. High-end homes are still off, but overall, we are seeing good demand." Existing-home sales in the West slipped 1.6 percent to an annual level of 1.24 million in April and are 0.8 percent below April 2010. The median price in the West was $203,400, down 6.1 percent from a year ago. In the Dallas/Fort Worth market, confidence among the homebuyers that I work with seems high as a result of the recent decrease in mortgage rates over the last month or two, coupled with seasonality factors that generally push homebuyers to shop more in the spring," said Josh Campbell, home mortgage consultant with Wells Fargo. "As a result of lower default rates over the last couple years, we're beginning to see signs that some lenders are more willing expand the criteria in which they're willing to lend. Whether or not it's a light at the end of the tunnel is yet to be seen, but there are plenty of opportunities for confident homebuyers in Dallas/Forth."
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