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SYRACUSE NAMED ONE OF FOUR "HEALTHY OR IMPROVING"
HOUSING MARKETS IN THE NATION
Existing-home Sales Down in December but 2007 was Fifth Highest on
Record
WASHINGTON, January 24, 2008 - Existing-home sales declined in
December following several months of stable activity, with total
sales in 2007 at the fifth highest on record, according to the
National Association of Realtors®.
Existing-home sales – including single-family, townhomes,
condominiums and co-ops – slipped 2.2 percent to a seasonally
adjusted annual rate1 of 4.89 million units in December from a pace
of 5.00 million in November, and are 22.0 percent below the 6.27
million-unit level in December 2006.
For
all of 2007 there were 5,652,000 existing-home sales, the fifth
highest year on record; however, the total was 12.8 percent below
the 6,478,000 transactions recorded in 2006.
Lawrence Yun, NAR chief economist, said the market is experiencing
uncharacteristic weakness. “Home sales remain weak despite improved
affordability conditions in many parts of the country, but we could
get a quick boost to the market if loan limits are raised in
combination with the bold cut in the Fed funds rate,” he said. “Home
prices are lower, mortgage interest rates continue to decline and
incomes are higher, but many potential buyers are delaying a
purchase.”
According to Freddie Mac, the national average commitment rate for a
30-year, conventional, fixed-rate mortgage fell to 6.10 percent in
December from 6.21 percent in November; the rate was 6.14 percent in
December 2006. Last week, Freddie Mac reported the 30-year fixed
rate dropped to 5.69 percent. “Although interest rates on jumbo
loans have fallen somewhat, they remain well above conventional
mortgage rates,” Yun said. “It isn’t surprising that the share of
single-family homes selling for more than $500,000 fell to 12.4
percent of transactions in December from 14.2 percent a year ago.”
Total housing inventory fell 7.4 percent at the end of December to
3.91 million existing homes available for sale, which represents a
9.6-month supply3 at the current sales pace, down from a 10.1-month
supply in November. “The fall in inventory in December is
encouraging, but inventories remain elevated and buyers have a clear
edge over sellers in many markets,” Yun said.
The
national median existing-home price2 for all housing types was
$208,400 in December, down 6.0 percent from a year earlier when the
median was $221,600. Because home sales have slowed the most in
higher cost markets, there is a downward distortion to the national
median as the mix of closed sales has changed over the past year.
For all of 2007, the median price was $218,900, down 1.4 percent
from a median of $221,900 in 2006.
NAR
President Richard Gaylord, a broker with RE/MAX Real Estate
Specialists in Long Beach, Calif., said that raising the loan limit
on conventional financing is urgently needed. “The most effective
way to stimulate housing and minimize the potential for a recession
is for lawmakers to raise the limit on conforming mortgages to
$625,000, which would open safe and affordable financing to buyers
in high-cost areas,” he said. “It is grossly unfair that some
Americans do not have access to low-interest rate loans. This would
help people as they move away from risky subprime mortgages and
high-interest rate jumbo loans.”
NAR
projects the higher loan limit would increase annual home sales by
nearly 350,000, reduce foreclosures by 140,000 to 210,000, and
increase economic activity by $44 billion. “What’s more, this would
come at no cost to taxpayers – it’s a policy change that could
really boost the economy,” Gaylord said.
Other projections of NAR’s analysis show raising the loan limit
would reduce the supply of homes on the market by 1.0 to 1.5 months,
and strengthen home prices by 2.0 to 3.0 percentage points. In
addition, as many as 500,000 jumbo loans would be refinanced to
lower interest rates.
Gaylord said current housing conditions vary widely. “Many local
areas continue to have healthy or improving local housing markets,”
he said. “For example, we saw higher home sales last month in
diverse areas such as San Antonio; Syracuse; Springfield, Ill.; and
Sarasota, Fla. If you’re thinking about getting into the market as a
buyer or a seller, consult a Realtor® to learn about conditions in
your area – they may be considerably different from the composite
national picture.”
Single-family home sales declined 2.0 percent to a seasonally
adjusted annual rate of 4.31 million in December from 4.40 million
in November, and are 21.6 percent below 5.50 million-unit level in
December 2006. In all of 2007, single-family sales fell 13.0 percent
to 4.94 million.
The
median existing single-family home price was $206,500 in December,
down 6.5 percent from a year earlier. For all of 2007, the
single-family median was $217,800, down 1.8 percent from 2006.
Existing condominium and co-op sales fell 3.3 percent to a
seasonally adjusted annual rate of 580,000 units in December from
600,000 in November, and are 24.5 percent below the 768,000-unit
pace a year ago. Condo sales for all of 2007 fell 11.0 percent to
713,000 units.
The
median existing condo price4 was $222,200 last month, which is 2.5
percent below December 2006. In all of 2007, the median condo price
was $226,400, up 2.0 percent from 2006.
Regionally, existing-home sales in the South slipped 1.0 percent to
an annual pace of 1.97 million in December, and are 20.9 percent
below December 2006. The median price in the South was $173,400,
down 4.1 percent from a year ago. Existing-home sales in the Midwest
declined 1.7 percent in December to a level of 1.16 million and are
20.5 percent below a year ago. The median price in the Midwest was
$159,800, which is 3.9 percent lower than December 2006. In the
West, existing-home sales fell 2.1 percent to an annual rate of
940,000 in December, and are 24.8 percent below December 2006. The
median price in the West was $309,800, down 11.1 percent from a year
ago. Existing-home sales in the Northeast dropped 4.6 percent to an
annual rate of 830,000 in December, and are 22.4 percent below a
year ago. The median price in the Northeast was $258,600, down 8.9
percent from in December 2006.
The
National Association of Realtors®, “The Voice for Real Estate,” is
America’s largest trade association, representing more than 1.3
million members involved in all aspects of the residential and
commercial real estate industries.
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The annual rate for a particular month represents what the total
number of actual sales for a year would be if the relative pace
for that month were maintained for 12 consecutive months.
Seasonally adjusted annual rates are used in reporting monthly
data to factor out seasonal variations in resale activity. For
example, home sales volume is normally higher in the summer than
in the winter, primarily because of differences in the weather
and family buying patterns. However, seasonal factors cannot
compensate for abnormal weather patterns.
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Existing-home sales, which include single-family, townhomes,
condominiums and co-ops, are based on transaction closings. This
differs from the U.S. Census Bureau’s series on new
single-family home sales, which are based on contracts or the
acceptance of a deposit. Because of these differences, it is not
uncommon for each series to move in different directions in the
same month. In addition, existing-home sales, which generally
account for 85 percent of total home sales, are based on a much
larger sample – nearly 40 percent of multiple listing service
data each month – and typically are not subject to large
prior-month revisions.
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The only valid comparisons for median prices are with the same
period a year earlier due to the seasonality in buying patterns.
Month-to-month comparisons do not compensate for seasonal
changes, especially for the timing of family buying patterns.
Changes in the geographic composition of sales can distort
median price data. Year-ago median and mean prices sometimes are
revised in an automated process if more data is received than
was originally reported.
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Total inventory and month’s supply data are available back
through 1999, while single-family inventory and month’s supply
are available back to 1982. Condos were tracked quarterly prior
to 1999 when single-family homes accounted for more than nine
out of 10 purchases (e.g., condos were 9.5 percent of
transactions in 1998, 8.5 percent in 1990 and only 6.1 percent
in 1982).
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Because there is a concentration of condos in high-cost metro
areas, the national median condo price can be higher than the
median single-family price. In a given market area, condos
typically cost less than single-family homes. Existing-home
sales for January will be released February 25. The next
Forecast / Pending Home Sales Index is scheduled for February 7,
and fourth quarter metropolitan area median existing-home prices
will be released February 14.
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