Real Estate Sales Statistics: Existing-Home Sales and Pending Home Sales

 

Existing-Home Sales Series

The NATIONAL ASSOCIATION OF REALTORS® Existing-Home Sales Series is the premier measurement of the residential real estate market. On or about the 25th of each month, NAR releases statistics on sales and prices of existing single-family homes for the nation and the four regions. Beginning on February 25, 2005, these figures include condos and co-ops, in addition to single-family homes. The association also produces state-by-state existing-home sales and metro area home prices on a quarterly basis.

 

Pending Home Sales Index

In March of 2005, NAR began producing the Pending Home Sales Index, a new leading indicator of housing activity. This is released in the first week of each month. The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed. Pending sales typically are finalized within a month or two of signing. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive years for existing-home sales.

 

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

 

►The Orlando Realtor rates this article a 4 out of 5 and finds this information to be very informative to the potential first time home buyer in Orlando or an investor looking for opportunities in the Florida Real Estate market, more specifically the Orlando Real Estate market.

FHA Key to Housing Rebound, Say Realtors®

 

WASHINGTON, April 02, 2009

 

The Federal Housing Administration is a primary source of mortgage financing for millions of America’s families and plays a key role in helping bring stability to the housing market. This is the message that the National Association of Realtors® delivered to the Senate Appropriations Subcommittee today.

 

“Without FHA financing, families would be unable to purchase homes and communities would suffer from continued foreclosures and blight,” said Lennox Scott, a member of NAR’s Real Estate Advisory Board and CEO of John L. Scott Real Estate in Bellevue, Washington. In his testimony, Scott shared NAR’s belief in the importance of FHA and concern for the safety and soundness of its programs due to its dramatic growth over a short period of time.

 

“We believe that FHA has done a good job stepping up to today’s market challenges. However, along with the dramatic growth in market share comes greater responsibility and the need for increased infrastructure and staff,” Scott said. Over the past 18 months, FHA has handled an increase in volume four times greater than 2007 levels, increasing its market share to over 30 percent.

NAR suggests a number of FHA improvements that will help maintain safe and affordable FHA loan products. These improvements include investment in staff and technology improvements; increased oversight and risk management; technical correction to help implement FHA programs; and monetizing the $8,000 first-time home buyer tax credit to allow buyers to apply it toward downpayment requirements.

 

“The U.S. Department of Housing and Urban Development has made a number of important and valuable changes to FHA over the years that has enabled it to stand up to the challenges of today’s mortgage market,” Scott said. “FHA is now a principal source of financing for millions of America’s families, and without it, the economic crisis would be significantly prolonged. This is why it is so important to invest in FHA improvements and advancements.”

 

NAR pledged to continue to work for FHA reforms that will ensure the continued success, availability and safety of FHA mortgage insurance programs.

 

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

 

►The Orlando Realtor rates this article a 5 out of 5 and finds this information to be very informative to the potential first time home buyer in Orlando or an investor looking for opportunities in the Florida Real Estate market, more specifically the Orlando Real Estate market.

Gain Seen In Pending Home Sales, Housing Affordability Sets New Record

 

WASHINGTON, April 01, 2009

 

Pending home sales have edged up, hinting at a possible pickup of sales activity in coming months, according to the National Association of Realtors®.

 

The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in February, rose 2.1 percent to 82.1 from a reading of 80.4 in January, but is 1.4 percent below February 2008 when it was 83.3.

 

Lawrence Yun, NAR chief economist, said the market is continuing to underperform. “Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains,” he said. “More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity.”

 

Also in February, NAR’s Housing Affordability Index rose to a new high.

The PHSI in the Northeast rose 10.6 percent to 63.9 in February but is 11.2 percent below a year ago. In the Midwest the index jumped 14.5 percent to 83.1 and is 3.4 percent higher than February 2008. The index in the South rose 4.4 percent to 85.8 in February but is 0.1 percent below a year ago. In the West the index fell 13.5 percent to 89.6 and is 1.7 percent below February 2008.

 

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said home buyers are in an excellent position. “The drop in mortgage interest rates and home prices mean the buying power of a typical family has never been better,” he said. “If you have a good job and long-term plans, it’s unlikely that you’ll find a much better time to buy a home. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position.”

 

NAR’s Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from an upwardly revised index of 172.6 in January, and is 36.3 percentage points higher than a year ago. The HAI, a broad measure of housing affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.

 

A median-income family, earning $59,700, could afford a home costing $285,600 in February with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price is considerably higher the median existing single-family home price in February, which was only $164,600.

 

“Obviously, potential home buyers need to be managing their existing debt effectively,” McMillan said. “A Realtor® can counsel you on what you may be able to afford given your personal financial situation. In some cases, buyers who want to build their future through homeownership may need to start reducing their debt and improving their credit score before entering the housing market.”

 

Last year at this time, the typical family could afford a home costing $265,600, which is $20,000 less than the current affordable price. “Homes in many areas are now selling for less than replacement construction costs – clearly this is an abnormal situation which will change once inventory is drawn down and supply and demand come closer into balance,” McMillan said.

 

Yun said he expects housing inventories to rise through early summer from a normal seasonal pattern of more sellers appearing in the spring. “But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory,” he said. “Under these conditions, we should see price stabilization in most markets by the end of the year.”

 

1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

 

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

 

Each March, NAR Research conducts a review of PHSI seasonal adjustment factors and fine-tunes data for the past three years.

2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the better housing affordability is for buyers.

 

The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.

 

Monthly publication of the index began in 1981 with annual data calculated back to 1970.

Existing-home sales for March will be released April 23; the next Pending Home Sales Index will be on May 4.

 

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

 

►The Orlando Realtor rates this article a 4.3 out of 5 and finds this information to be very informative to the potential first time home buyer in Orlando or an investor looking for opportunities in the Florida Real Estate market, more specifically the Orlando Real Estate market.

Realtors® Say Fed Move to Buy More Securities Will Boost Housing Markets

 

Washington, March 18, 2009

 

The following is a statement by National Association of Realtors® President Charles McMillan:

“The National Association of Realtors® applauds the Federal Reserve announcement today that it would purchase an additional $750 billion in Fannie Mae and Freddie Mac mortgage-backed securities and up to $300 billion in longer term Treasury securities. This is great news for American home buyers and homeowners because mortgage interest rates will continue to remain at historic lows. 
 
“NAR has been advocating since last fall that the Fed be more active in buying mortgage-backed securities. We are excited that the Fed acted on this provision of the stimulus plan that we offered to the government in November.

“Greater numbers of home buyers will be able to purchase a home, and homeowners facing challenges will be able to refinance into better terms. We already are experiencing a great improvement in housing affordability due to historically low interest rates, and the Fed’s move will push affordability conditions to the best levels in 40 years. In addition, continued low rates will lessen foreclosure pressure and help stabilize home prices sooner, as more American buy homes and draw down inventory.” 
 
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

 

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

 

►The Orlando Realtor rates this article a 3.7 out of 5 and finds this information to be very informative to the potential first time home buyer in Orlando or an investor looking for opportunities in the Florida Real Estate market, more specifically the Orlando Real Estate market.

Realtors® Recommend Responsible Lending Principles

 

WASHINGTON, March 12, 2009

 

Realtors® care about protecting consumers from unfair lending practices and are important allies in those efforts. That is the message National Association of Realtors® President Charles McMillan delivered to the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit in testimony today.

 

“As we have seen recently, abusive lending erodes confidence in the nation’s housing system, strips equity from homeowners and damages local and national economies,” said McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth.

In 2005 NAR adopted a set of Responsible Lending Principles to encourage lending practices that ensure consumers have affordable mortgage choices and are protected in the real estate transaction. The principles also call for ensuring strong underwriting, eliminating prepayment penalties, eliminating mortgage flipping, strengthening enforcement against predatory and abusive lending practices, and maintaining the independence of appraisers and the appraisal process.

 

While NAR’s written testimony further detailed the responsible lending practices that NAR has advocated for many years, the focus of McMillan’s testimony was appraisal independence. “Realtors®  believe that a strong and independent appraisal industry is vital to restoring faith in the mortgage origination process,” said McMillan.

 

With a record of supporting legislation that strikes the proper balance of oversight and consumer protection, NAR has endorsed legislation that would strengthen the independence of the appraisal process by ensuring appraisers serve as an unbiased arbiter of a property’s value.

 

To protect consumers, NAR recommended that lenders be required to inform each borrower of how property value was determined and provide them with a copy of each appraisal at no additional cost. NAR also called for stronger penalties against anyone who improperly influences the appraisal process, federal support for better state enforcement, and enhanced education and qualifications for appraisers.

 

“The irresponsible and abusive lending that occurred during the past few years has taken a toll on our communities and our nation. Now is the time to correct these problems to ensure we do not face the same circumstances in the future,” McMillan said. “Realtors®  are proud to encourage responsible lending and we stand ready to work with Congress to ensure that the nightmare of foreclosures does not overshadow the American Dream of homeownership. As the leading advocate for homeownership and the real estate industry, NAR will continue to address issues facing Americans who are trying to purchase a home, protect their current home or preserve investment opportunities in residential and commercial properties.”

 

Copyright National Association of REALTORS®, Reprinted from REALTOR.org with permission.

 

►The Orlando Realtor rates this article a 4 out of 5 and finds this information to be very informative to the potential first time home buyer in Orlando or an investor looking for opportunities in the Florida Real Estate market, more specifically the Orlando Real Estate market.