Existing Home Sales Fall for 5th Straight Month

Sales of existing homes fell 0.5 percent in August to a seasonally adjusted annual rate of 6.30 million, according to the National Association of Realtors. Sales have fallen five months in a row and in nine of the past 12 months. Sales are down 12.6 percent in the past year. It's the lowest sales pace since January 2004.

The median price of an existing home fell 1.7 percent year-over-year to $225,000. It's the first time since April 1995 that median prices have fallen on a year-over-year basis. It's the second largest decline in the 30-year history of the Realtors' survey, exceeded only by a 2.1 percent drop in November 1990. Inventories of unsold homes rose to 3.92 million, a 7.5-month supply at the August sales pace, the most since April 1993. At the August sales pace, it would take 7.5 months to sell the backlog of unsold homes, representing the longest period since April 1993.

Sales of single family homes were unchanged at a 5.51 million annual pace. But this sales pace was 12.3 percent lower than a year ago. Condo sales fell 3.5 percent to 793,000. By region of the country, sales of existing homes rose 1.9 percent in the Northeast to a seasonally adjusted annual rate of 1.07 million units in August.

The median price for a home sold in the Northeast was $271,000, down 3.9 percent from August 2005. Existing home sales in the Midwest rose 0.7 percent to an annual rate of 1.44 million units with the median price dropping to $176,000, 1.1 percent below a year ago.Sales in the South fell by 0.8 percent to an annual rate of 2.51 million units with the median price falling to $184,000, down 2.6 percent from a year ago. Sales in the West fell by 2.3 percent in August to an annual rate of 1.29 million units with the median price dropping to $345,000, up 0.3 percent from a year ago.

Don't Ask Me Why, But I STILL Think We Are Going to Have A Really Good 4th Quarter! Chris

Housing Trends In The Carolinas

Condo sales, building tepid
Inventory exceeds demand, analysts say
By Jenny Burns
The Sun News
Condominium developers are reacting to a softening market by slowing condo building in Horry County, N.C. - reversing a three-year trend. Single-family building continues to climb.
The number of condo building permits dropped 34 percent in the second quarter to 724 from 1,105 last year, while new condo sales fell 31 percent. Resale condo sales fell 26 percent, according to Market Opportunity Research Enterprises, a regional real estate market research firm in Rocky Mount, N.C.
The slowing sales mean better prices for buyers, and more incentives from builders to sell units.
The sales slowdown is showing up in Brunswick County, N.C., and Georgetown County as well.
"We don't see this as an extended downturn. Although it seems sharp right now, it is sharp only in the very short term as builders try to adjust from the excess of their starts late last year," said Bernard Helm, president of M.O.R.E, which tracks real estate markets in the Southeast.
Tom Maeser, market analyst and president of the Fortune Academy of Real Estate, said he has gotten many calls from developers concerned about the growing condo inventory on the market, which is triple what it was last year.
Maeser said condo developers are cutting back, often because they may have trouble getting the 80 to 100 percent presales that the bank requires for a construction loan.
The single family market is still going strong. Single family building increased 7 percent over last year to 1,535 from 1,433 even though new home sales stayed flat and resale homes fell six percent. Analysts say this could signal future softening in the single family market.
"Builders will have some excess inventory, and that will end up being good news for consumers. They have to work out that inventory and that means softening prices," Helm said.
The drop in resales and flat growth in new home sales - at 980 homes this year and last - signals new home sales may move into negative territory in the future, Helm said. An 11 percent drop in single family lot sales also signals a future drop in sales, he said.
Lawrence Langdale, vice president of Coldwell Banker Chicora Development, said he expects the single family market will remain strong while the condo market will take 18 to 24 months to adjust. He said the drop in single family lots is attributed to loss of investors in the market, since lots, like condos, are more often purchased by investment buyers.
Maeser said it's a good sign if home sales can stay on target with 2005's record sales - as it has done so far. He said the flat growth in new home sales indicates builders are being careful to stay even with last year and not build too many spec homes.
"They don't want to get stuck with a lot of inventory out there," Maeser said.

Brunswick County did not see the sales downturn that Horry County had in the first quarter, but sales in the nation's 28th fastest-growing county did drop in the second quarter.
"It means that the Brunswick market is not quite as volatile," Helm said.
New single family home sales in Brunswick dropped 7 percent to 471 from 506 and resales dropped 24 percent to 820 from 1,078. Single family lot sales also dropped 36 percent to 2,084 from 3,257.
Helm attributes the drop to rising interest rates on adjustable rate mortgages, making it difficult for buyers to purchase a second home. Helm said the Brunswick market is less volatile because it has fewer national builders than Horry County. Brunswick is also seeing a downturn in building condos and single family homes, but townhome building has picked up.
"It's doing a leveling off. We're also seeing county permitting leveling off," said David Sandifer, owner of Holden Beach Properties and Brunswick commissioners chairman. "I think we will see another spurt but this is just a lull."
Sandifer said the high end market in Brunswick is selling well, but there's a lack of moderate income housing. Townhome building is also up in Horry County. Langdale says builders are choosing townhomes and single family for future projects because they are more often purchased by primary homeowners.
Helm said the townhome market has strong demand on the Strand, but it can be easily overbuilt because it's a smaller market than the condo and single family markets.
In Georgetown County, resale homes have declined slightly but new home sales are up 60 percent to 104 from 65. New condo sales are also up from 45 to 151. "Georgetown County is getting ready to do what Horry County has already done. It's good on new but has problems in resales. The decline will happen in new home sales," Helm said. Single family building and lot sales have also dropped off in Georgetown County.
Prices in all three counties continue to show year-over-year increases.
The median price for homes and condos in Horry County increased 16 percent to $189,900 from $162,900.

Home Sales Index

Pending Home Sales Index Points To Easing Market WASHINGTON (September 1, 2006) – Home sales should be leveling out in the months ahead at a lower pace, according to an index based on pending home sales, a leading indicator for the housing market published by the National Association of Realtors®.The Pending Home Sales Index,* based on contracts signed in July, is down 7.0 percent to a level of 105.6 from a downwardly revised reading of 113.5 in June, and is 16.0 percent lower than July 2005.The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed; pending sales typically are finalized within a month or two of signing.An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.David Lereah, NAR’s chief economist, said there’s a closer relationship between annual changes in the index and actual market performance than there is with month-to-month comparisons. “In looking at year-to-year comparisons, the pending home sales index has been very close in predicting the actual pace of home sales,” he said. “Based on recent changes from a year ago, the index shows existing-home sales should continue to ease after a stronger-than-expected decline in July, but are likely to flatten in the months ahead.”Lereah said psychological factors account for much of the decline in July home sales. “We’ve never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy in growing and interest rates are favorable,” he said. “Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy. Contributing to this hesitancy is a lot of negative news stories, but in the end we believe that underlying market fundamentals will prevail.”Regionally, the PHSI in the West declined 5.5 percent in July to 103.1 and was 20.3 percent below July 2005. The index in the South dropped 6.4 percent to 122.3 in July and was 11.3 percent below a year ago. In the Northeast, the index fell 7.7 percent in July to 92.1 and was 15.5 percent below July 2005. The index in the Midwest dropped 9.0 percent to 93.3 in July and was 20.1 percent lower than a year ago.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.
# # #* The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer parallel between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than there is with month-to-month comparisons.The forecast will be revised September 7, and existing-home sales for August will be released September 25. The next Pending Home Sales Index will be on October 2.