WASHINGTON, November 28, 2007 – Single-family existing-home sales were stable in October while the condo sector was down, according to the National Association of Realtors®. Lingering effects of the credit crunch were a drag on sales but the mortgage situation has improved significantly.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased by 1.2 percent to a seasonally adjusted annual rate1 of 4.97 million units in October from a downwardly revised level of 5.03 million in September, and are 20.7 percent below the 6.27 million-unit pace in September 2006.
Lawrence Yun, NAR chief economist, expected the sluggish performance. “As noted last month, temporary mortgage problems were peaking back in August when many of the sales closed in October were being negotiated. We continue to see the biggest impact in high-cost markets that rely on jumbo loans,” he said. “Mortgage availability has improved as evidenced by much lower mortgage interest rates and a sharp jump in FHA endorsements for home purchases.
“A trend away from subprime mortgages to FHA loans, which often carry much lower interest rates, is a positive development for consumers and the housing market going forward. Still, it will take some time for the change to yield a measurably higher closed sales volume in the aftermath of the subprime collapse. In the near term, we expect home sales to remain fairly stable.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.38 percent in October, unchanged from September; the rate was 6.36 percent in October 2006. Last week, Freddie Mac reported the 30-year fixed rate fell to 6.20 percent.
The national median existing-home price2 for all housing types was $207,800 in October, down 5.1 percent from October 2006 when the median was $218,900, but there is a downward distortion from the temporary problems with jumbo loans that slowed sales in high-price markets, and that dragged down the national median.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., emphasized that all real estate is local. “Keep in mind that home prices are up in 93 out of 150 metro areas, and there is a lot of confusion in the market from reports about national data. Broadly speaking, home prices in most areas are up modestly or fairly stable,” he said. “Areas with population or job growth are seeing the strongest home price gains.”
Among the many metro areas showing healthy price gains are Charlotte, N.C.; San Francisco; Albuquerque; and Green Bay, Wis.
Total housing inventory rose 1.9 percent at the end of October to 4.45 million existing homes available for sale, which represents a 10.8-month supply3 at the current sales pace, up from a downwardly revised 10.4-month supply in September.
Single-family home sales were unchanged from September at the seasonally adjusted annual rate of 4.37 million in October, and are 20.8 percent below 5.52 million-unit level in October 2006. The median existing single-family home price was $205,700 in October, down 6.3 percent from a year ago.
Existing condominium and co-op sales fell 9.1 percent to a seasonally adjusted annual rate of 600,000 units in October from 660,000 in September, but are 20.2 percent below the 752,000-unit pace in October 2006. The median existing condo price4 was $223,500 in October, up 4.9 percent from a year ago.
Regionally, existing-home sales in the Northeast were unchanged at an annual pace of 900,000 in October, and are 12.6 percent below October 2006. The median price in the Northeast was $258,700, up 1.3 percent from a year ago.
Existing-home sales in the South also were unchanged in October, at an annual rate of 2.03 million, but are 19.4 percent below a year ago. The median price in the South was $171,400, down 6.7 percent from October 2006.
In the Midwest, existing-home sales slipped 1.7 percent to an annual rate of 1.18 million in October, and are 16.9 percent below October 2006. The median price in the Midwest was $164,000, down 1.6 percent from a year ago.
Existing-home sales in the West fell 4.4 percent in October to a level of 870,000, and are 33.1 percent below a year ago. The median price in the West was $318,200, which is 6.9 percent lower than October 2006.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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1The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
2The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the geographic composition of sales can distort median price data.
year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.
3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982. Comparisons of current total month’s supply with single-family data prior to 1999 are broadly valid because single-family homes accounted for more than nine out of 10 purchases in the earlier timeframe (e.g., condos were 9.5 percent of transactions in 1998, 8.5 percent in 1990 and only 6.1 percent in 1982).
4Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.
Existing-home sales for November will be released December 31. The next Forecast / Pending Home Sales Index is scheduled for December 10.