March home resales beat economist’s estimatess of 2.5 percent and showing signs of recovery, according to the National Association of Realtors. Existing home sales increased 3.7 percent month over month to an annual rate of 5.10 million units.

Lawrence Yun, NAR chief economist, expects the improvement to continue. “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.”

The median sales price for an existing home was $159,600, down 5.9 percent from the median price of $169,600 a year-ago.

The supply of existing homes on the market dropped to 8.4 months’ in March, down from 8.5 in February.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.

According to Freddie Mac, the national average for a 30-year, conventional, fixed-rate mortgage decreased to 4.84 percent in March from 4.95 percent in February.

In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream. First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment. And 25 million current homeowners would be locked out of lower refinancing rates because they lack the required 25 percent equity in their homes.

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http://www.realtor.org/topics/qrm/qrm_whitepaper

NAR reports cash buyers at record high: 35% of sales

By Inman News, Wednesday, April 20, 2011.

After stumbling in February, sales of existing homes rose 3.7 percent in March from the month before, according to a National Association of Realtors report released today.

Completed sales of existing single-family homes, townhomes, condominiums and co-ops fell 6.3 percent compared to March 2010 -- when a federal homebuyer tax credit program elevated sales -- to a seasonally adjusted annual rate of 5.1 million units.

"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," said Lawrence Yun, NAR's chief economist, in a statement.

He said the generally upward trend in monthly existing-home sales suggests the housing market is "clearly on a recovery path."

According to NAR's housing affordability index, the typical monthly mortgage principal and interest payment for a median-priced existing home is 13 percent of gross household income -- the lowest since records began in 1970, the trade group said.

A separate NAR survey found that cash buyers accounted for a record 35 percent of sales in March, up from 27 percent in March 2010. Investors made up 22 percent of sales, up from 19 percent in March 2010. First-time homebuyers bought 33 percent of homes last month, down from 44 percent the same month a year ago.

Unsold inventory rose 1.5 percent month-to-month, to 3.55 million existing homes. That represents an 8.4-month supply at the current sales rate, essentially level with the February supply.

Regionally, the South fared best in March. Sales rose 8.2 percent month-to-month and fell 1 percent year-over-year, to an annual rate of 1.99 million. The region's median price fell 6.6 percent year-over-year, to $138,200.

Sales in the region rose year-over-year in most price ranges, except in homes between $100,000 and $500,000. Sales of homes under $100,000 rose the most, 13.6 percent, while homes above $1 million rose 12.5 percent. The South was also the only region to see a jump in sales of homes between $500,000 and $1 million.

Sales in the Northeast increased 3.9 percent month-to-month, to 800,000, but fell 12.1 percent year-over-year. The region's median price declined 3 percent year-over-year, to $232,900. Sales fell year-over-year in all price ranges except for homes above $1 million, which remained essentially flat. 

In the Midwest, sales rose 1 percent month-to-month, to 1.06 million, but fell the most of any region year-over-year, 13.1 percent. Median price fell 7.1 percent year-over-year, to $126,100. Sales dropped year-over-year in all price ranges, with the biggest decline, 25.9 percent, in sales of homes between $100,000 and $250,000.

The West was the only region to see a month-to-month decline in sales, 0.8 percent to 1.25 million. Sales in the region fell 3.1 percent year-over-year. The West also saw the biggest year-over-year drop in median price, 11.2 percent, to $192,100.

That drop was largely due to a 44.6 percent year-over-year jump in sales of homes under $100,000 in the region. Every other price range except that of homes above $1 million saw sales decrease last month. Sales of homes above $1 million rose 6.2 percent year-over-year.

Homes under $250,000 made up 69.6 percent of overall sales nationwide in March.

Of 19 major metro areas, St. Louis saw the biggest declines in both sales and median price, both falling 20 percent year-over-year.

Only Baltimore and Phoenix saw year-over-year sales jumps, 6.3 percent and 9.5 percent, respectively, though each saw its median price drop 12.5 percent.

Median price rose year-over-year only in San Antonio and Washington, D.C., last month: 3.6 percent and 1 percent respectively.

NAR's existing-home sales figures are estimated using a method that may overstate home sales by as much as 20 percent, according to mortgage and property data aggregator CoreLogic.

NAR has said it is working on making some benchmark revisions to its historic sales data sometime this year. According to economics blog Calculated Risk, the numbers reported today "will probably be revised down significantly, but they are still useful on a month-to-month basis."

In a separate report released by the California Association of Realtors today, pending home sales in the state rose 15.2 percent month-to-month in March, and remained essentially flat year-over-year.

Market share of distressed property sales in the state last month remained flat from March 2010, at 51 percent.

The statewide median price of nondistressed properties sold in March was $386,500, 41 percent higher than the short-sale median price of $274,700, and 88 percent higher than the March REO median price of $205,000, the report said.

by: Svein Groem
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by: KerrySimer Smith

The recent Great Recession highlighted the interdependency of the U.S. social structure to the real estate industry. As the real estate market froze to a standing halt, so did the whole U.S. economy. Government officials and regulators should have expected such results as real estate employed more Americans than any other sector.

Prior to the Great Recession, 60% of U.S. assets were tied to real estate. This occurred due the free market philosophy entrenched within the U.S. economic foundations. Real properties are mortgaged to pay for sales or to enable owners to access their equity. Mortgages are bundled and divided up in accordance to average credit rating of total borrowers and other variables. Investment banks and other financial institutions purchase and trade mortgage bundles to acquire more capital. In addition, insurance companies and retirement funds purchase mortgages to increase cash flow needed to cover for monthly payments.

Furthermore, the real estate industry employed many Americans. Most individuals are quick to recognize real estate agents and brokers. In addition, the real estate industry includes appraisers, construction workers, civil servants employed at all government levels and many more. Many other industries are also connected to real estate. Production and manufacturing of construction materials, as well as points of sale and transportation of goods to construction sites from sales locations are few of such connected industries. For example, in order for a house to be build, the builder must purchase a real property, conduct a soil test, contracts an engineering firm for designing and drawing, hires a licensed contractor to build, and purchase all the material needed.

The U.S. real estate industry is very influential in domestic politics. Following the collapse of real estate prices, many real estate associations lobbied the government to enact restrictions against foreclosures. The government was split between supporting the frontend (sales and home owners) and the backend (financial institutions and holders of liens). As a result, the government passed special tax credit to stimulate real estate sales and offered government backed modification through HAMP. As for the backend, the government invested heavily in many of the different banks who operated within the United States. Commonly known as “bailout”, government assistance to financial institutions allowed those organizations to survive the worst recession in modern history of humanity.

By offering a double deal to help both sides of the equation, the government acted in accordance with the principle of social reasonability. Many homeowners faced growing harsh times and needed the government to force holders of mortgage deeds to accept renegotiated mortgage agreements. At the same time, financial institutions are some of United States biggest employers. By saving them, the federal government curbed the down spiral of collapsing economy. In addition, saving such big businesses helped the United States maintain its attraction as a fertile ground for economic growth.