Pending Home Sales Soar Nationwide in May, Biggest Jump Since 2010

Pending home sales surged more than expected in May, the latest sign a sluggish housing recovery is picking up steam.

Signed contracts for previously owned homes jumped 6.1% from April, the National Assn. of Realtors said Monday. It was the largest pop since April 2010. Then, families rushed to lock in a first-time home buyer tax credit before it expired.

After slowing last summer, the housing market appears to be turning a corner. More homes on the market, slowing price appreciation and lower mortgage rates have lured buyers off the sidelines, economists say.

May's pending sales data beat expectations.The median forecast for economists polled by Bloomberg News was for a 1.5% rise.

And buyers closed deals on 4.9% more previously owned homes in May than April. Meanwhile, new home sales jumped 18.6% in May.

“An improvement in sales is likely to continue for a least a few more months, a welcomed reprieve after a significantly slow start to the year,” Sterne Agee chief economist Lindsey Piegza said in a statement.

Still, the market isn’t humming like last year. Higher prices and fewer foreclosures have investors and families less likely to strike a deal. Pending sales last month were 5.2% below May 2013 levels.

The Realtors pending sales index, adjusted for seasonal swings, tracks signed, but not closed contracts for previously owned homes. Deals usually close within one or two months.

Pending sales rose in all regions from April. In the West, they climbed 7.6%.  

Further gains, Piegza said, will rely on “sustained improvement in income and job creation.”

Copyright © 2014, Los Angeles Times

January New-Home Sales Soaring

Financial FAQs

January New-Home Sales Soaring

The Polar Vortexes haven’t stopped everything.  It looks like new-home sales have picked, a sign that existing-home inventories are too low in spite of the Ice Age conditions. Sales of new single-family houses in January 2014 were at a seasonally adjusted annual rate of 468,000, according to estimates released jointly today by the U.S. Census Bureau and HUD. This is 9.6 percent above the revised December rate of 427,000 and is 2.2 percent above the January 2013 estimate of 458,000.

Graph: Calculated Risk

It was the highest sales rate since 2008, the end of the housing bubble. But inventories are still too low, which means new-home sales will continue to increase as more housing construction comes on line, with close to 1 million units already in the construction pipeline. The months of supply decreased in January to 4.7 months from 5.2 months in December.

Graph: Calculated Risk

The problem is obvious from this graph. Inventories have returned to levels that prevailed from 1997 to 2005, a prolonged period of pent up demand for housing that, along with prolonged easy credit conditions, caused the housing bubble.

January's data show a big 10.4 percent gain in the South which is by far the largest region for new home sales. The West, which is a distant second behind the South, shows an 11.0 percent gain.

A plus for sales has been recent price concessions as the median price is down 2.2 percent to $260,100. The year-on-year sales gain, which spent most of last year in the double digits, is now modest, at 3.4 percent and in line with the 2.2 year-on-year gain for sales.

This is while total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 5.1 percent to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December, and are 5.1 percent below the 4.87 million-unit pace in January 2013.

So new-home sales are surging, and will continue to surge, as long as existing inventories are so low. Last month’s existing-home activity was the slowest since July 2012, when it stood at 4.59 million, and signals the effect of low inventories and rising interest rates that have cut mortgage applications to their lowest level in a year.

Harlan Green © 2014

Pending Home Sales Tick Upward in March

Contracts to buy existing homes rose slightly in March, as a historically low supply of for-sale listings nationwide continues to plague the housing market. The Pending Home Sales Index from the National Association of Realtors increased 1.5 percent month to month. It is 7 percent higher than March 2012.

These numbers represent signed contracts, not closings, and are therefore an indicator of future final sales.

"Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply," said Realtors chief economist Lawrence Yun in a release. "Little movement is expected in the near-term sales closings, but they should edge up modestly as the year progresses.

Listings were down 17 percent in March from a year earlier, according to the association, with several factors affecting inventories. Millions of Americans still owe more on their mortgages than their homes are worth, and that makes it impossible for them to move without incurring major expense.

Others are watching home prices rise and may be waiting to see just how high they go before listing their homes.

Meanwhile, home builders, while trying to ramp up production, are faced with a lack of land, labor and materials. Single-family starts were at a seasonally adjusted annual rate of just 619,000 units, an improvement from the worst of the crash but far below historical norms.

Regionally, the pending home sales index was unchanged in the Northeast from February, up 0.3 percent in the Midwest, up 2.7 percent in the South and up 1.5 percent in the West.

Existing home sales in March, based on closings, fell just under one percent in March. While higher than a year ago, home sales appear to have leveled off, despite this being the normally busy spring season.

—By CNBC's Diana Olick

California Foreclosures Plunging, Sales Rising

The Mortgage Corner

California Foreclosures Plunging, Sales Rising

 The number of California homeowners entering the foreclosure process plunged to the lowest level in more than seven years last quarter, reports DataQuick. The unusually sharp drop in the number of mortgage default notices filed by lenders stems mainly from rising home values, a strengthening economy and government efforts to reduce foreclosures, says DQ.

No wonder, as the median price paid for a California home last quarter was $297,000, up 22.7 percent from a year ago, reports DataQuick.  During first-quarter 2013 lenders recorded 18,567 Notices of Default (NoDs) on California houses and condos. That was down 51.4 percent from 38,212 during the prior three months, and down 67.0 percent from 56,258 in first-quarter 2012

Graph: Econoday

Most of the loans going into default are still from the 2005-2007 period, per DQ. The median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for more than three years, indicating that weak underwriting standards peaked then. The most active creditors in the formal foreclosure process last quarter were Wells Fargo (5,546), JP Morgan Chase (3,863) and Bank of America (2,565).

And Calculated Risk’s Bill McBride has become very sanguine about real estate’s role in boosting economic growth. He maintains that new-home sales will pick up due to unfilled demand, due to the big jump in household formation—to 1.3 million new households last year and the prediction this level will be maintained over the next decade. He sees the so-called existing-to-new home sales ratio trending back down to its historical average of 6 to 1 from its current heightened ratio, in this very interesting graph. It was the “flood’ of depressed sales from foreclosures that depressed new home sales because of the plunge in housing prices brought on by the foreclosures.              

Graph: Econoday

“According to the Census Bureau, there were 104 thousand new homes sold in Q1 2013, up about 19.5 percent from the 87 thousand sold in Q1 2012. That is a solid increase in sales, and this was the highest sales for Q1 since 2008,” said McBride.

“Although there has been a large increase in the sales rate, sales are still near the lows for previous recessions. This suggests significant upside over the next few years.  Based on estimates of household formation and demographics, I expect sales to increase to 750 to 800 thousand over the next several years. Also housing is historically the best leading indicator for the economy, and this is one of the reasons I think The future's so bright, I gotta wear shades.”

                                           Harlan Green © 2013

California pending home sales post monthly and annual gains in October;share of equity sales continues to expand

LOS ANGELES (Nov. 21) – California pending home sales rose both from the previous month and year in October for the first time in seven months, while the share of equity sales grew slightly, marking a four-year high, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. 

Pending home sales data:

C.A.R.’s Pending Home Sales Index (PHSI)* rose 4.3 percent from a revised 115.2 in September to 120.2 in October, based on signed contracts.  Pending sales were up 3.6 percent from the 116.1 index recorded in October 2011.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“The strong pace of pending sales in October is a continuation of what we’ve experienced for most of 2012, with demand remaining robust across all parts of the state,” said 2013 C.A.R. President Don Faught.  “Non-distressed sales – which are up nearly 50 percent from a year ago – are especially strong, while REO sales are down more than 51 percent, primarily due to a short supply of REOs.  The significant increase in non-distressed sales has driven the share of equity sales to its highest level in more than four years.”

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – compared with total sales expanded slightly in October.  The share of equity sales in October increased to 63.4 percent, up from 63 percent in September, the highest level since June 2008.  Equity sales made up about half (49 percent) of all sales in October 2011.
• The share of REO sales statewide contracted in October, while the share of short sales essentially was unchanged.  The combined share of all distressed property sales dipped to 36.6 percent in October, down from 37 percent in September and down from 51 percent in October 2011.
• Of the distressed properties, the share of short sales was 24.4 percent in October and 22.6 percent a year ago. 
• The share of REO sales fell further in October, dropping from 12.3 percent in September to 11.8 percent in October and was down from 28 percent in October 2011. 
• The available supply of REOs tightened in October, with the Unsold Inventory Index for REOs falling from 2.2 months in September to 1.9 months in October.  The Unsold Inventory Index for short sales was 3.1 months and was 3.2 months for equity sales.

Charts:

• Closed housing sales in October by sales type (equity, distressed).
• Pending sales compared with closed sales.
• Historical trend in the share of equity sales compared with distressed sales.
• Housing supply of REOs, short sales, and equity sales in October.
• A historical trend of REO, short sale, and equity sales housing supply.
• Year to year change in sales by property type.

Share of Distressed Sales to Total Sales(Single-family)

Type of Sale	Oct. 2011	Sept. 2012	Oct. 2012
Equity Sales	49.0%	63.0%	63.4%
Total Distressed Sales	51.0%	37.0%	36.6%
REOs	28.0%	12.3%	11.8%
Short Sales	22.6%	24.3%	24.4%
Other Distressed Sales (Not Specified)	0.4%	0.4%	0.4%
All Sales	100.0%	100.0%	100.0%

Single-family Distressed Home Sales by Select Counties
(Percent of total sales)

County	Oct. 2011	Sept. 2012	Oct. 2012
Alameda	NA	28%	21%
Amador	46%	38%	38%
Butte	43%	36%	35%
Contra Costa	NA	29%	26%
El Dorado	48%	38%	36%
Fresno	61%	51%	48%
Humboldt	28%	28%	20%
Kern	67%	45%	41%
Kings	NA	39%	42%
Lake	78%	47%	50%
Los Angeles	48%	37%	37%
Madera	89%	60%	55%
Marin	26%	24%	21%
Mendocino	49%	47%	43%
Merced	58%	46%	47%
Monterey	61%	40%	45%
Napa	46%	37%	30%
Orange	36%	25%	28%
Placer	58%	43%	40%
Riverside	63%	50%	50%
Sacramento	64%	50%	47%
San Benito	72%	55%	58%
San Bernardino	65%	45%	46%
San Diego	28%	15%	14%
San Joaquin	63%	52%	49%
San Luis Obispo	46%	28%	29%
San Mateo	23%	20%	17%
Santa Clara	34%	22%	22%
Santa Cruz	40%	31%	28%
Siskiyou	37%	40%	32%
Solano	72%	59%	62%
Sonoma	51%	37%	29%
South Lake Tahoe	31%	33%	25%
Stanislaus	67%	57%	55%
Tehama	49%	49%	43%
Tulare	NA	NA	46%
Yolo	61%	51%	45%
California	51%	37%	37%

**Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.