April 21, 2011 (Chris Moore)
The National Association of Realtors (NAR) reports existing home sales eeked out a 3.7 percent increase to a seasonally adjusted rate of 5.10 million completed transactions in March, while at the same time home prices continued their march downward which has led to the most affordable housing market since the realty organization started keeping records back in 1970.
The increase in existing home sales compared to an upwardly revised 4.92 million completed transactions in February.
Compared to March, 2010, existing home sales, consisting of single-family homes, townhomes, condominiums, and co-ops, was down 6.3 percent from the seasonally adjusted rate of 5.44 million completed transactions last year, primarily due to elevated response levels from the home buyer tax credit.
The national median existing home price for all housing types in March was $159,600, which is down 5.9 percent from March of last year. NAR’s housing affordability index shows that the typical monthly mortgage principal and interest was only 13 percent of gross household income, the lowest since they began keeping records in 1970.
NAR notes that distressed properties accounted for nearly 40 percent of all existing home sales with discounts typically in the vicinity of 20 percent. Distressed properties made up 39 percent of the market in February and 35 percent of the market in March of 2010.
Lawrence Yun, NAR chief economist, was optimistic. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
NAR says in the report that they believe sales would be notably stronger if mortgage lending would return to normal safe standards citing as evidence data from Freddie Mac and Fannie Mae showing that requirements to obtain a conventional mortgage has tightened as the average credit score has risen to about 760 compared to about 720 in 2007. Meanwhile for FHA loans, the average credit score for a government backed mortgage is now around 700, up from 630 in 2007.
NAR also took an apparent swipe at the latest “Qualified Residential Mortgage (QRM)” talks as Yun also stated, “Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans.”
Regionally, existing-home sales in the Northeast rose 3.9 percent to an annual rate of 800,000 cmpleted transactions in March but are 12.1 percent below March 2010. The median price in the Northeast was $232,900, down 3.0 percent from a year ago.
Existing-home sales in the Midwest increased 1.0 percent into a pace of 1.06 million completed transactions but are 13.1 percent lower than a year ago. The median price in the Midwest was $126,100, which is 7.1 percent below March 2010.
In the South, existing-home sales rose 8.2 percent to an annual level of 1.99 million completed transactions in March but are 1.0 percent below March 2010. The median price in the South was $138,200, down 6.6 percent from a year ago.
Existing-home sales in the West slipped 0.8 percent to an annual pace of 1.25 million completed transactions in March and are 3.1 percent below a year ago. The median price in the West was $192,100, which is 11.2 percent lower than March 2010.
Tags: NAR, existing home sales, single-family homes, distressed properties, median home price, housing inventory, low mortgage rates, highest affordability