New and Existing Home Sales Drop in January
According to the latest report from the National Association of REALTORS®, existing home sales in January decreased 7.2 percent to a seasonally adjusted-annual rate of 5.05 million units in January from a level of 5.44 million units in December, however this does represent an increase over a year ago when the rate was 4.53 million units (seasonally adjusted).
Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:
•There were 275,00 existing homes sold in January which is a 33.4 percent decrease from December’s 413,000 sales.
•January’s sales of 275,000 units is a 7.0 percent increase from January, 2009’s sales of 257,000 units.
Below are highlights from each region:
Northeast – 41,000 homes sold in January, 2010, a decrease of 37.8 percent from December and and increase of 17.1 percent from the year before.
Midwest - 54,000 homes sold in January, 2010, a decrease of 37.2 percent from December and an increase of 3.8 percent from the year before
South - 104,000 homes sold in January, 2010, a decrease of 35.0 pecent from December and an increase of 8.3 percent from the year before.
West – 76,000 homes sold in January, 2010, a decrease of 24.7 percent from December and a increase of 2.7 percent from the year before.
Other highlights of the NAR Report:
Median price of homes sold in January in the US was $164,700, a decrease of 3.4 percent from December’s median price of $170,500 and is the same as the median price from a year ago.
Distressed sales accounted for 38 percent of all home sales in January, an increase of 18.8 percent from December’s rate of 32 percent.
First-Time homebuyers accounted for 40 percent of the home sales in January, down from 43 percent in December.
Investors were the buyers of 17 percent of the homes in January, up from 15 percent in December.
Repeat home buyers were responsible for approximately 43 percent of January’s sales.
Total housing inventory at the end of January was 3,265,000 homes for a 7.8 month supply, an increase of 8.3 percent from last months 7.2 month supply.
The existing home sales report comes on the heels of The U.S. Department of Commerce report showing the sale of New Homes in January were at a seasonally adjusted annual rate of 309,000, an 11.2 percent decrease from the revised December rate of 348,000 and is 6.1 percent below a year ago.
With all the recent reports being down, what should you watch for now?
Interest rates – Rates ALWAYS have an affect on the housing market. Presently we have near record-low rates, however the Federal Reserve is indicating they will stop purchasing mortgage-backed securities in the next couple of months and industry experts feel this will lead to higher interest rates. In addition, there is some concern about inflation, which would lead to higher rates as well. Needless to say, higher interest rates are not going to help the housing market recover.
Tax Credits - By all indications the homebuyer tax credits have played a role in getting buyers to pull the trigger and has contributed to home sales. The credits come to an end April 30th, unless extended by Congress, which most feel is doubtful, and then we will see what happens to the market afterward. First-time buyers, the biggest benificiaries of the credit, make up 40 percent of the sales currently, so they are a significant component.
Foreclosures – Foreclosures, REO’s and short-sales all put negative pressure on the housing market in terms of home prices and there is no end in site.
Underwater Borrower Sentiment - There are a record number of people “underwater” on their homes (owe more than their homes are worth) but, according to Robert Shiller, a noted economist, 80 percent of those borrowers still feel like they should continue to pay their mortgages and stick it out. According to a recent report by First Amercian CoreLogic, this sentiment changes dramatically once homeowners exceed 25 percent negative equity or exceed $70,000 in negative equity. According to the same report the average negative equity for underwater borrowers at the end of 2009 was $70,700. The number of underwater homeowners was 11.3 million at the end of 2009.
Stay tuned to this site. We'll continue to update you on all the news that affects housing, and tell it to you like it is.
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Are You Being Squeezed Out of Your Home?
Most home sellers — a whopping 67% – who sold their homes last year couldn’t pay their mortgages.
A recent survey indicated that, for the most part, the bottom line was, homeowners are being squeezed out of their home because they couldn’t make their mortgage payments.
In response to another question on specific financial woes, sellers cited difficulty meeting monthly mortgage obligations (30%); loss of a job (18%); and mortgage payment increases(15%) as among their primary motivations to sell, according to the Survey of Home Sellers.
By comparison, in 2008, 1 in 5 sellers cited difficulty paying the mortgage, while 11% sold because of financial difficulties.
More survey highlights:
•Nearly three-fourths of sellers were concerned about the buyers’ abilities to get a home loan, an increase from 54 % in 2008.
•63% of homes fell out of escrow prior to closing. Nearly 70% of sellers cited “buyer could not get an acceptable mortgage” and more than 60% said “buyer backed out” as the main reasons the home fell out of escrow. Other reasons included: Buyer’s remorse (26%); “lender withdrew and did not fund” (24%); and “home prices continued to decline” (18%).
•Once the home did sell, half of sellers reported escrow did not close on time in 2009, compared with 36% in 2008.
•On average, homes sold for $20,958 less than the original asking price in 2009, while the median difference between the selling and listing price was $32,315.
•The list-to-sold-price ratio was significantly larger between first-time sellers ($30,000 below list price) and sellers who had previously sold a home ($8,000 below list price).
•The percentage of first-time sellers grew to nearly half of all sellers (44%) in 2009, a 33% increase from 2008, and nearly three times the 2007 percentage of 15%.
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Tax Credit Deadline Looming
Time is running out for home buyers to take advantage of the home tax credit. Many home buyers and sellers have utilized this once in a lifetime opportunity during this troubled housing market, but the clock is ticking on the April 30th deadline for the home tax credit program.
The home tax credit offers qualifying home buyers (buying their first house) an 8,000 dollar tax credit, and move-up or repeat home buyers a $6,500 credit. The home tax credit was a major part of President Barack Obama’s stimulus package, and it was designed to help raise home prices and as well as keep mortgage rates in check. More than anything else, it has helped homeowners and home buyers meet in the middle through the housing market madness.
While April 30th is still two months away, the average real estate transaction takes almost 90 days. As it stands today, home buyers must be under contract on their housing purchase by April 30th and close by June 30th to be eligible for the home tax credit.
We've covered this topic several times before on our site, but here again are the stipulations of the tax credit:
$8,000 First-time Home Buyer Tax Credit at a Glance
•The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
•The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
•The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
•The tax credit applies only to homes priced at $800,000 or less.
•The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
•For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
•For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance
•To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
•The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
•The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
•The tax credit applies only to homes priced at $800,000 or less.
•The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
•Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
For more information on the First Time (and move-up) Home Buyer Tax Credit, hop over to the IRS website .
