Interesting article at Forbes with a lot of good data on the real estate market averaged from around the country. With inventory down and prices up it seems like it might become increasingly more difficult to buy a house. If you need to sell your house, remember – Ohio Property Brothers buys houses.
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Sales of previously-owned homes rose 2.4% in December as median home prices for the year overall finished at their highest level since 2007. Sales, however, slowed to a pace 3.1% below the annual rate for 2013.
Completed transactions of existing-homes (single-family homes, townhomes, condominiums and co-ops) increased to an annual, seasonally adjusted rate of 5.04 million in December, the National Association of Realtors said Friday. That’s up 2.4% from November’s downwardly revised annual pace of 4.92 million. Compared to one year earlier, December’s figure is higher by 3.5%.
But the total number of existing-home sales for all of 2014–4.93 million–represents a drop from 2013′s annual 5.09 million. The slow in annual sales comes amid a rise in the price for previously-owned homes. In 2014 the national median existing-home price rose to $208,500, a 5.8% increase over 2013′s average ($197,1000) and the highest level since 2007, when the national median price hit $219,000.
Inventory is also getting tighter, which could indicate affordability concerns. The supply of available housing for sale at the end of December fell 11.1% to 1.85 million existing-homes, a 4.4-month supply at the current sales pace. (A six-month supply is considered a healthy market.) That’s a drop from November, when the available stock of housing represented a 5.1-month supply. Unsold inventory is about 0.5% lower than a year ago, when there were 1.86 million existing-homes available for sale.
“A drop in housing supply in December raises some affordability concerns in the months ahead as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates,” said Lawrence Yun, NAR’s chief economist. “Housing costs – both rents and home prices – continue to outpace wages and are burdensome for potential buyers trying to save for a downpayment while looking for available homes in their price range.”
Last year was marked by a sluggish start for home sales, though activity picked up in the second half of 2014. “Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated,” Yun said. “Sales were measurably better in the second half – up 8% compared to the first six months of the year.”
Given that December’s average interest rates for 30-year, conventional, fixed-rate mortgages fell to 3.86%, according to Freddie Mac , the lowest level since May 2013 (3.54%), we might expect to see an increase in homebuying. In fact, last week the WSJ reported a jump in mortgage refinancing applications. (The average rate for all of 2014 was 4.17%.)
But the low rates haven’t yet translated into home buyers. In addition to the slower sales pace overall for 2014, an NAR report shows first-time buyer levels near historic lows. In December, the share of first-time homebuyers fell to 29%, down from 31% in November but higher than one year ago, when they comprised just 27% of the market. In 2014, first-time buyers comprised an average of 29% of the housing market for the second year in a row. Realtors are hoping that President Obama’s recently announced plan to reduce mortgage insurance premiums may coax some would-be buyers into the market. That plan goes into effect Jan. 26; critics have said it’s not enough to make a difference.
After the housing market crashed in 2008, NAR began tracking the share of home sales that were distressed (foreclosures and short sales). Distressed sales rose in December to 11% of the total, up from 9% in November but down from 14% one year earlier. In December 8% of existing-home sales were foreclosures, 3% short sales. Foreclosures sold for an average discount of 15% below market value in December (17% inNovember); short sales for a 12% average discount (13% in November).
The share of homes purchased for all-cash rose to 26% in December, compared to 25% in November and 32% in December 2013. Individual investors, who account for many cash sales, purchased 17% of homes in December, up from November (15%) but below December 2013 (21%). Of these individual investors, 63% paid all cash in December.
The median existing-home price (seasonally adjusted) in December was $209,500, up 6% from one year earlier. Prices have now risen on a year-over year basis for 34 consecutive months.
In December properties stayed on the market an average of 66 days, up just slightly from November (65 days), and shorter than the 72-day average one year earlier. Thirty-two percent of homes sold in November were on the market less than one month. Short sales took a median of 98 days to sell, foreclosures 61 days and non-distressed homes 66 days. In December 31% of homes sold were on the market less than one month.
Single-family home sales increased 3.5% to a (seasonally adjusted, annual) rate of 4.47 million in December, up from 4.32 million in November and 4% above the level one year before. The median sales price for an existing-home was $210,200 in December, up 6.3% from a year earlier.
Condo and co-op sales fell 5% to a (seasonally adjusted, annual) pace of 570,000 units in December, from 600,000 in November, flat from one year before. The median sales price for a previously owned condo was $204,000 in December, 3.2% higher than a year earlier.
Sales, as always, varied by region. In December the pace declined 2.9% in the Northeast, to an annual rate of 660,000, 3.1% above a year ago. The median price in the Northeast was $246,000, 3.2% higher than a year earlier. Sales also declined in the Midwest (by 3.5%) to 1.09 million in December, 2.7% below the level a year before. The median Midwest price was $159,100, up 5.3% from a year earlier.
Sales climbed in both the South and the West, where in December they rose 3.8% to 2.17 million and 9.8% to 1.12 million, respectively. That’s a Southern increase of 7.4% from one year earlier, a Western jump of 2.8%. The median Southern sales price was $184,100 in December, up 6.6%; the median Western price was $299,600, a 5.6% increase year-over-year.