Existing-Home Sales Flattening, Prices Cooling Say Realtors

Existing-home sales were down modestly in June, and home prices were up slightly from a year ago, according to the National Association of Realtors.

Total existing home sales -- including single-family, townhomes, condominiums and co-ops -- declined 1.3 percent to a seasonally adjusted annual rate of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month's sales were 8.9 percent below the 7.27 million-unit pace in June 2005.

David Lereah, NAR's chief economist, said the housing market is flattening-out. "Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing," he said. "At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago."

The group said the national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000.

Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.

Single-family home sales eased 0.9 percent to a seasonally adjusted annual rate of 5.81 million in June from an upwardly revised 5.86 million in May, and were 8.2 percent below the 6.33 million-unit pace in June 2005. The median existing single-family home price was $231,500 in June, up 1.1 percent from a year ago.

Existing condominium and cooperative housing sales fell 5.5 percent to a seasonally adjusted annual rate of 805,000 units in June from a pace of 852,000 in May, and were 14.6 percent below the 943,000-unit level in June 2005. The median existing condo price3 was $226,900 in June, down 2.1 percent from a year earlier.

Regionally, existing-home sales in the Midwest were unchanged in June, holding at a level of 1.52 million, and were 6.2 percent lower than a year ago. The median price in the Midwest was $175,000, which is 1.7 percent below June 2005.

Existing-home sales in the West also were unchanged, at an annual pace of 1.41 million in June, and were 17.1 percent lower than June 2005. The median price in the West was $342,000, the same as a year ago.

Existing-home sales in the South eased 2.3 percent to a pace of 2.57 million in June, and were 5.5 percent below June 2005. The median existing-home price in the South was $191,000, down 0.5 percent from a year earlier.

Existing-home sales in the Northeast declined 3.5 percent to an annual sales rate of 1.11 million units in June, and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.

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.

U.S. June existing home sales fall to 6.62 million

Sales of existing homes fell 1.3% in June to a seasonally adjusted annualized rate of 6.62 million, the National Association of Realtors said Tuesday. Economists were expecting a decline to 6.58 million. The inventory of unsold homes rose to a record 3.725 million, a 6.8 month supply at the June sales rate, the highest since July 1997. The median price has risen 0.9% in the past year to $231,000. It's the weakest price growth in 10 years. "I hope we are hitting bottom," said David Lereah, chief economist for the private real estate trade group. Sales of existing homes in May were revised up to 6.71 million from 6.67 million

U.S. housing starts down 5.3 percent in June

The housing starts in the United States declined by 5.3 percent in June and analysts said that it was the latest sign the U.S. housing market is cooling down.

The U.S. Commerce Department said in a report on Wednesday that the housing starts in June dropped to an annual rate of 1.850 million units, down from a revised 1.953 million unit pace in May. It was also weaker than the average forecast of private economists of a pace of 1.920 million units.

U.S. single-family housing starts fell by 6.5 percent to an annual pace of 1.486 million units, the slowest since November 2004.

Meanwhile, building permits, an indicator of future trends of U. S. housing market, also fell by 4.3 percent in the month to an annual pace of 1.862 million.

U.S. housing starts in June was down 11 percent from the same month a year ago and building permits are off 14.9 percent, the report indicated.

Home sales down 15.6% in June

Sales of existing homes in Lake, Orange, Osceola and Seminole counties are down 15.6 percent when compared to June of last year, and year-to-date sales are down by 1.8 percent from 2005, according to the Orlando Regional Realtor Association.

June sales of existing homes in the Orlando area fell by 14 percent when compared to June 2005.

Despite the decline, the area's sales-to-date remain 1.57 percent ahead of the 2005 year-to-date tally and are on track for a possible record year, the association says.

A total of 2,680 existing homes changed hands through members of the Orlando Regional Realtor Association in June, for a midyear total of 14,924. In June 2005, 14,694 homes had been sold.

Contributing to the slowing pace of sales, says ORRA President Beverly Pindling, is the marked increase in inventory of available homes.

"Last year, the market was so tight that buyers were forced to make immediate decisions and negotiations rarely factored into lightning-fast transactions," Pindling says. "Right now, buyers are able to take their time viewing different homes and even engage in the negotiation process."

June saw the smallest rise in inventory from the previous month since February. June's inventory was up by only 258 listings from May, whereas from April to May inventory jumped by 2,143 homes.

The average mortgage interest rate in June rose to 6.45 percent over last month's 6.39 percent. The rate is expected to reach 7 percent by year end.

The median price of Orlando-area homes -- $249,000 -- is currently 3.97 percent above the median price in June of 2005, which was $239,500. However, June's median price actually dropped by 1.6 percent when compared with May, another reflection of a stabilizing market that is permitting price negotiations between buyers and sellers, Pindling says.

A breakdown of existing homes shows that of the 2,680 sales during June, 2,010 were single-family homes; 459 were condos; and 211 were town homes, villas or duplexes.

Last June, 2,436 sales were single-family homes; 483 were condos; and 200 were town homes, villas or duplexes.

Most existing homes fell within the $200,000-$249,999 range, while most condos fell within the $140,000-$179,999 range.

When compared to June of 2005, each of the four counties saw a decrease in sales last month: Lake County by 26.1 percent; Orange County by 14.8 percent; Osceola by 17.5 percent; and Seminole by 7 percent.

Mortgage rates rise near 2002 record

Interest rates on 30-year mortgages rose this week to the highest level since the spring of 2002.

Freddie Mac, the mortgage company, reported Thursday that rates on 30-year, fixed-rate mortgages increased to a nationwide average of 6.80%, up from 6.74% last week.

The increase pushed interest rates on 30-year mortgages to the highest level since they stood at 6.81% the week of May 24, 2002.

The lowest mortgage rates in four decades powered a boom in housing that pushed sales of homes to record levels for five years. But sales slowed this year as mortgage rates have risen.

Some economists express fears that the housing boom could turn into a bust. But Federal Reserve Chairman Ben Bernanke told Congress on Thursday that so far the slowdown "appears to be orderly."

In part, the rise in mortgage rates this week was blamed on increases in inflation, including a 0.3% increase in core inflation as measured by the consumer price index. That increase was reported Wednesday.

Rates on 15-year, fixed-rate mortgages increased from 6.37% last week to 6.41%.

Rates on one-year adjustable rate mortgages rose from 5.75% last week to 5.80%.

Rates on five-year adjustable-rate mortgages rose from 6.33% to 6.36%.

The mortgage rates do not include add-on fees known as points. The 30-year and five-year mortgages carried a nationwide average fee of 0.5 point. The 15-year mortgage had a nationwide average fee of 0.4 point and the one-year ARM carried a fee of 0.6 point.

A year ago, 30-year mortgages averaged 5.73%, 15-year mortgages stood at 5.32%, one-year ARMs were at 4.42% and five-year ARMs averaged 5.26%.

Home sales in southern Calif. drop to 7-year low

ome sales in southern California, the region with some of the priciest neighborhoods in the U.S., dropped to the lowest level for any June in the past seven years as higher borrowing costs discouraged buying.

A total of 29,237 new and existing homes were sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, down 17.5 percent from a year earlier, La Jolla, California-based DataQuick Information Systems said Tuesday in a statement. Last month's sales were the lowest for a June since 1999, when 29,076 homes were sold.

Real estate is cooling across the U.S. as mortgage rates rose to a four-year high this month. Confidence among homebuilders dropped this month to the lowest level in more than 14 years, according to the National Association of Home Builders/Wells Fargo index, and shares of builders including Centex Corp. have fallen an average of 39 percent this year.

In Southern California, the median price for a home was a record $493,000 last month, up 1.6 percent from May and 6 percent from a year earlier. The year-over-year increase was the smallest since May 2000, and home sales posted the seventh straight month of annual declines.

"We view this as the normal winding down of a real estate cycle, where declining demand gradually erodes price growth until it halts or reverses," DataQuick President Marshall Prentice said in the statement.

The typical monthly mortgage payment Southern California homebuyers committed to paying was $2,437 last month, up from $2,376 in May and $2,021 a year earlier. Adjusted for inflation, current payments are about 8.4 percent higher than at the peak of the previous real estate cycle, in 1989, DataQuick said.

Some of Southern California's most expensive homes are in neighborhoods such as Newport Beach, Beverly Hills and Malibu.

Home builders index falls to 15-year low in July

Home builders' confidence plunged to a 15-year low in June, reflecting growing worries about rising interest rates and declining affordability, the National Association of Home Builders said Tuesday.

The NAHB/Wells Fargo housing market index fell three more points to 39 in July, the lowest since December 1991. The index peaked at 72 last June and has fallen in 11 months since then. In July, all three components of the home builders' index fell. Current sales index fell to 43 from 47, the expected sales index dropped to 46 from 51, and the traffic of potential buyers index fell to 27 from 29

Builder group sees more housing weakness

The U.S. housing market will continue to unwind after the multiyear boom with slower price increases and fewer housing starts as interest rates move up, according to a report released Wednesday by the National Association of Home Builders.

"We are coming off a very strong couple of years for the housing industry, and markets are now starting to cool to more sustainable levels," according to David Seiders, chief economist of the Washington, D.C.-based trade association representing home-construction companies.

"Each market has different factors that affect its local economy and housing market, but overall we are forecasting an orderly slowdown in housing starts," he said in a statement accompanying the study.

While the average price of a home increased 13.2% last year and 10.8% in 2004 driven by hot coastal markets, the Office of Federal Housing Enterprise Oversight found, that pace is expected to cool in 2006 and 2007.

"Higher house prices together with higher interest rates have dampened housing demand throughout most of the country, bringing demand more in line with supply," according to the report. "Already there are reports of downward pressure, or at least reduced upward pressure, on housing prices around the country."

Higher mortgage rates have helped take some of the steam out of housing. The 30-year, fixed-rate mortgage averaged 6.79% for the week ended July 6, according to mortgage lender Freddie Mac.

The NAHB report also examines the housing market on a state-by-state basis, since individual markets can vary based on employment, demographics, economic climate, zoning restrictions and other factors.

For example, while housing starts are expected to fall nationally after they hit their highest level in more than 30 years in 2005, Idaho, North Carolina, Oklahoma, Washington and Wyoming are expected to see construction of new homes increase this year, NAHB said.

At the same time, the economic forecast for the West and South is optimistic, yet the outlook for California is not as positive because the state already has expensive home prices and an overall high cost of living, the report added.

Louisiana is also weak after it was battered by Hurricane Katrina. The Gulf state has lost more than 200,000 jobs, most of them in New Orleans, as a result of the storm.
Other states with aging industrial infrastructures such as Illinois, Massachusetts, Michigan and Ohio also have seen employment levels decline as the automobile industry faces stiffer global competition, according to NAHB.

However, states such as Texas that border on states hit by the hurricanes could see activity pick up as evacuees move in.

"This will spur multifamily housing starts in 2006 and an even bigger jump in construction activity in 2007," the NAHB said. "While the rebuilding and repair process is proceeding slowly in Louisiana and Mississippi, the pace is expected to pick up in 2007."

Economists Expect Mortgage Rates to Hold

Chief economist for Freddie Mac, Frank Nothaft, said in an interview on Monday in Washington that 30-year rates will likely continue to rise in the upcoming months, but shouldn't go past 7%.

Interest rates for fixed-rate, 30-year home mortgages are likely to hold below 7% for the rest of the year, according to mortgage giant Freddie Mac.

Chief economist for Freddie Mac, Frank Nothaft, said in an interview on Monday in Washington that 30-year rates will likely continue to rise in the upcoming months, but shouldn't go past 7%.

Nothaft said that long-term interest rates could even fall and will probably not hit 7% until the second half of 2007.

Freddie Mac was established by Congress in 1970. The company buys residential mortgages from private lenders and packages and sells them on the securities market. This process replenishes the nation's supply of home loan money.

Interest rates on a 30-year, fixed-rate mortage currently average 6.79%, according to Freddie Mac.

The housing market has been experiencing a slowdown, partly due to the increases in interest rates. Homes are staying on the market longer, and with a larger inventory, some areas are experiencing price stability or depreciation. With houses becoming less costly, more buyers could enter the arena, giving the market a soft landing that experts are looking for.

Michele Joy of KB Homes said that when interest rates are below 7% it is a "great time to buy."

"It's great news for the market," she said. "It's really good for the overall affordability index."

Experts recommend fixed-rate mortgages to most consumers. With a fixed-rate loan, the risk is minimized as monthly payments stay the same throughout the term of the loan. Rising and falling interest rates do not affect the current loan.

With stabilizing interest rates, and the risk of increases still looming, many experts predict that homeowners with adjustable-rate mortgages will refinance for a fixed-rate mortgage.

Rising Rates Slowed Existing-Home Sales in May

Sales of existing homes fell 1.2 percent in May as higher interest rates slowed buying activity, the National Association of Realtors said Tuesday.

Sales fell to a seasonally adjusted annualized rate of 6.67 million units in May from a downwardly revised level of 6.75 million in April. The rate in May was 6.6 percent below the pace of 7.14 million units a year earlier, but slightly higher than analysts had expected.

David A. Lereah, the association's chief economist, said the data were consistent with his forecast of a soft landing for the housing market.

"Over all, I think this is a pretty good report," he said. "It demonstrates that the housing sector is slowing, but it's slowing in a manageable way."

But the data also showed a buildup of inventories of unsold homes. A record 3.6 million homes were for sale at the end of May, representing a 6.5-month supply, compared with 6.1 months at the end of April and the largest monthly supply since May 1997, the trade group said.

In some overheated local markets, like Southern Florida, the supply of unsold homes has reached more than 10 months' worth, putting them on the cusp of price reductions, Mr. Lereah said.

Any downward adjustment in prices would probably last only a few months, he said, because of demand from home shoppers who have been waiting for opportunities to buy at more affordable prices.

"There's pent-up demand out there in these local markets where prices will soften because those local economies are very healthy," Mr. Lereah said. "There's job creation, and there's also good migration of households into those areas."

Nationally, home prices still increased in May, both compared with April and a year earlier. The national median existing home price for all housing types was $230,000 in May, up 6 percent from $217,000 in May 2005 and up 3.6 percent from the April median of $222,000.

Mr. Lereah said sales dropped more sharply in some markets, including Florida, Virginia, California and the District of Columbia. States where sales increased included Texas, North Carolina, Georgia and Utah. In the Northeast, the Realtors said existing home sales fell 4.2 percent, compared with April, and in the Midwest they fell 3.8 percent, while edging up 0.7 percent in the West and 0.4 percent in the South.

The national average mortgage rate for conventional 30-year fixed-rate loans was 6.6 percent in May, up from 6.51 percent in April and 5.72 percent in May 2005.