National Association of Realtors

WASHINGTON - Modest near-term movement is expected in existing-home sales, with a recovery in sales seen during the second half of the year, according to the latest forecast by the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in May, fell 4.7 percent to 84.7 from an upwardly revised reading of 88.9 in April, and remains 14.0 percent below May 2007 when it stood at 98.5.

Lawrence Yun, NAR chief economist, said some pullback after a sharp increase in the previous month was expected. “The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy,” he said.

The PHSI in the West slipped 1.3 percent to 97.5 in May but is 2.0 percent higher than May 2007. In the Northeast, the index declined 2.9 percent to 77.0 in May and is 16.4 percent below a year ago. The index in the Midwest fell 6.0 percent to 78.6 and is 13.8 percent below May 2007. In the South, the index dropped 7.1 percent in May to 84.5 and is 22.1 percent below a year ago.

Yun said location has never mattered more than in the current market. “Some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half. Price conditions vary tremendously, even within a locality, depending upon a neighborhood’s exposure to subprime loans.”

Double-digit pending sales gains in May from a year ago were noted in Colorado Springs, Colo.; Sacramento, Calif.; and Spartanburg, S.C.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the current market offers immediate benefits and long-term value for many buyers. “Home buyers are getting a great deal right now,” he said. “Although inflationary expectations appear to be under control for the time being, sharper consumer price gains could lead to notably higher mortgage interest rates in 2009.”

Based on current indicators, the 30-year fixed-rate mortgage is forecast to rise gradually to 6.5 percent by the end of this year, and then hold at that level for most of 2009. NAR’s housing affordability index is improving this year and is likely to rise 15 percentage points to 127.0 for all of 2008.

Existing-home sales are expected to grow from an annual pace of 5.01 million in the second quarter to 5.75 million in the fourth quarter. For all of 2008, existing-home sales should total 5.31 million, and then increase 5.0 percent next year to 5.58 million.

“The speed at which home prices has declined in a few select markets is unprecedented, but the large price declines in those areas have enticed bargain hunters back into the market,” Yun said. “Interestingly, there have been reports of multiple bidding after the large price cuts, so it is possible that most of the price declines have already occurred in those markets.”

The aggregate median existing-home price is projected to fall 6.2 percent this year to $205,300, and then rise by 4.3 percent in 2009 to $214,100.

New-home sales are likely to fall 32.3 percent to 525,000 in 2008 and decline another 3.4 percent next year to 507,000. “In light of high inventory conditions, rising commodity prices and construction costs will curtail new home construction deep into 2009,” Yun said. Housing starts, including multifamily units, will probably fall 28.7 percent to 966,000 this year, and then drop another 9.0 percent in 2009 to 879,000.

The median new-home price is expected to decline 3.2 percent to $239,300 this year, and then rise 5.3 percent in 2009 to $251,900.

Growth in the U.S. gross domestic product (GDP) is seen at 1.6 percent in 2008 and 1.4 percent next year. The unemployment rate should average 5.4 percent this year and 5.8 percent in 2009.

Inflation, as measured by the Consumer Price Index, is forecast at 3.7 percent this year and 2.4 percent in 2009. Inflation-adjusted disposable personal income is projected to grow 1.5 percent in both 2008 and 2009.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The 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 relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

Existing-home sales for June will be released July 24; the next Forecast / Pending Home Sales Index will be released August 7.

Existing-home sales increased in May with buyers responding to lower home prices, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 2.0 percent to a seasonally adjusted annual rate 1 of 4.99 million units in May from a level of 4.89 million in April, but are 15.9 percent below the 5.93 million-unit pace in May 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said buyers are seeing value in the current housing market. “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he said. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”

The national median existing-home price2 for all housing types was $208,600 in May, down 6.3 percent from a year ago when the median was $222,700.

Lawrence Yun, NAR chief economist, said there’s still a lot of inventory in the market. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he said. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”

Total housing inventory at the end of May fell 1.4 percent to 4.49 million existing homes available for sale, which represents a 10.8-month supply3 at the current sales pace, down from a 11.2-month supply in April.

Although conditions remain mixed around the country, unpublished snapshot data shows a number of areas are experiencing much higher sales activity than May 2007, including Sacramento, the San Fernando Valley and Monterey County in California; Sarasota, Fla.; and Battle Creek, Mich.

“Keep in mind that the volume of home sales is the primary driver of economic activity that is tied to housing,” Yun said. “It’d be premature to say the improvement marks a turnaround. The market is fragile, so a first-time home buyer tax credit and a permanent raise in loan limits would be important steps to get the housing engine humming.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.04 percent in May from 5.92 percent in April; the rate was 6.26 percent in May 2007.

Single-family home sales rose 1.6 percent to a seasonally adjusted annual rate of 4.41 million in May from 4.34 million in April, but are 14.5 percent below the 5.16 million-unit pace in May 2007. The median existing single-family home price was $206,700 in May, which is 6.8 percent below a year ago.

Existing condominium and co-op sales increased 5.5 percent to a seasonally adjusted annual rate of 580,000 units in May from 550,000 in April, but are 24.6 percent lower than the 769,000-unit level a year ago. The median existing condo price4 was $223,400 in May, down 2.1 percent from May 2007.

Regionally, existing-home sales in the Midwest rose 5.5 percent in May to a pace of 1.16 million but are 16.5 percent lower than a year ago. The median price in the Midwest was $165,300, which is 0.7 percent below May 2007.

In the Northeast, existing-home sales rose 4.6 percent to an annual rate of 910,000 in May, but are 15.0 percent below May 2007. The median price in the Northeast was $278,000, down 2.4 percent from a year ago.

Existing-home sales in the West increased 2.0 percent to an annual pace of 1.02 million in May, but are 12.8 percent below a year ago. The median price in the West was $286,600, which is 16.0 percent lower than May 2007.

In the South, existing-home sales slipped 0.5 percent to an annual rate of 1.91 million in May, and are 17.0 percent below May 2007. The median price in the South was $175,000, down 4.3 percent from May 2007.

# # #

1The 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.

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.

2The 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.

3Total 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).

4Because 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 June will be released July 24, and the next Forecast/Pending Home Sales Index is scheduled for July 8.

Diane Torrence

Earning a Fine Homes designation is not easy, as veteran agent Diane Torrence discovered. To qualify, an agent must list at least two Fine Homes or have closed one Fine Homes transaction during the past year; earn five personal elective points based on criteria set by Prudential Real Estate; and have at least one year of full-time real estate sales. This exclusive designation defines professional quality standards within the Prudential Real Estate Network and recognizes the level of specialized knowledge, experience and skills required by clients of wealth.

However, Torrence qualified with flying colors, and now has Fine Homes Specialist to add to her impressive collection. She is also e-certified, a home staging professional with 14 years experience in home design, and was an experienced Mortgage Broker prior to becoming a REALTOR.

At their annual awards banquet in February, Prudential California Realty presented Torrence with a special award for her leadership and for setting a positive role model at their Fillmore office.

A strong believer in giving back to the community, Torrence is on the board of her Rotary group in Fillmore to sponsor the Heritage Valley 5/10k Run for the Fillmore May festival. She is also a current member for the Citizens Corps Group in Santa Paula, which provides an action plan in the event of a disaster. However, Torrence’s true passion is her involvement in helping foster children. For 8 years, she has been integral in working with Royal Family Kids' Summer Camp. There are 2 in Ventura, and both take about 30 children for a one-week experience to create positive memories in the lives of these children. “It's amazing!” said Torrence.

With her tagline, “At Home In The Heritage Valley!” Torrence enthusiastically represents her clients in the Santa Paula/Fillmore area. She can be reached at (805) 218-1429.

Existing-home sales edged down in March, remaining within a narrow range of sales activity that has persisted since last September, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 2.0 percent to a seasonally adjusted annual rate (1) of 4.93 million units in March from a level of 5.03 million in February, and remain 19.3 percent below the 6.11 million-unit pace in March 2007. A rise in condo sales in March was offset by a drop in single-family sales. Regionally, sales rose in the Northeast and West but fell in the Midwest and South.

Lawrence Yun, NAR chief economist, said the market is performing unevenly. “Though mortgage rates are at historically low levels, some borrowers are facing restrictive lending practices in declining markets,” he said. “At the same time, many buyers continue to bide their time with a large number of homes to choose from, while other potential buyers remain on the sidelines.”

The national median existing-home price (2) for all housing types was $200,700 in March, down 7.7 percent from a year ago when the median was $217,400. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively higher sales activity in low-cost markets.

A mix of market conditions continues around the country, but areas showing healthy price gains include Des Moines, Iowa; Austin, Texas; and Durham, N.C.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.97 percent in March from 5.92 percent in February; the rate was 6.16 percent in March 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said there are problems with the implementation of mortgage guidelines. “It appears there is some over-reaction on the part of some lenders now in requiring higher downpayment percentages than may be necessary,” he said. “On the other hand, buyers in many parts of the country are able to take advantage of more lenient policies for FHA loans. However, because lenders don’t have enough underwriting experience with FHA loans in high-cost areas, there are localized bottlenecks in loan processing. Consumers should consult with a Realtor® in their area to learn about the kind of financing that may be available to meet their needs.”

Yun offered a caution. “With elevated inflation, the Federal Reserve should be extra careful about further rate cuts,” he said. “Mortgage interest rates, which do not move directly with Fed funds rates, may rise measurably and hurt the housing recovery if inflation gets out of hand. Monetary stimulus is plentiful – what is needed more at this point is a home buyer tax credit to get buyers off the sidelines and prevent the market from overshooting on the downside.”

Total housing inventory rose 1.0 percent at the end of March percent to 4.06 million existing homes available for sale, which represents a 9.9-month supply (3) at the current sales pace, up from a 9.6-month supply in February.

Single-family home sales fell 2.7 percent to a seasonally adjusted annual rate of 4.35 million in March from 4.47 million in February, and are 18.4 percent below the 5.33 million-unit pace in March 2007. The median existing single-family home price was $198,200 in March, down 8.3 percent from a year ago.

Existing condominium and co-op sales rose 3.6 percent to a seasonally adjusted annual rate of 580,000 units in March from 560,000 in February, but are 25.5 percent below the 779,000-unit level a year ago. The median existing condo price (4) was $219,400 in March, which is 2.8 percent lower than March 2007.

Regionally, existing-home sales in the Northeast rose 2.2 percent to an annual pace of 910,000 in March, but are 18.8 percent below March 2007. The median price in the Northeast was $284,300, up 4.6 percent from a year ago.

Existing-home sales in the West rose 2.2 percent in March to a level of 940,000 but are 22.3 percent below a year ago. The median price in the West was $285,100, which is 14.7 percent lower than March 2007.

In the South, existing-home sales fell 3.5 percent to an annual rate of 1.92 million in March and are 20.0 percent below March 2007. The median price in the South was $167,200, down 7.1 percent from a year ago.

Existing-home sales in the Midwest dropped 6.5 percent to an annual rate of 1.16 million in March, and are 15.9 percent below a year ago. The median price in the Midwest was $152,600, down 5.3 percent from March 2007.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

(1) 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.

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.

(2) 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.

(3) 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).

(4) 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 April will be released May 23, and the next Forecast/Pending Home Sales Index is scheduled for May 7.

The following is a statement by National Association of Realtors® President Richard F. Gaylord on today's nomination of Steve Preston for Secretary of the U.S. Department of Housing and Urban Development.

On behalf of NAR’s more than 1.2 million members, I want to thank President Bush for moving quickly in nominating a new head for the U.S. Department of Housing and Urban Development. NAR has had a positive experience working with Administrator Steve Preston in his role with the U.S. Small Business Administration, and we believe he will do a fine job representing HUD and helping the nation navigate through the housing downturn and the mortgage crisis.

Mr. Preston’s past experience, both as CEO of ServiceMaster and as SBA Administrator, gives him good insight into the needs of small businesses that serve the real estate and housing industries.

We congratulate Mr. Preston on his nomination and look forward to working with him at this critical time for our nation’s economy and the housing market. Together, with Congress and the administration, we look forward to implementing new legislation and regulation that will help stabilize the housing market.

VENTURA, CA – With homeowners losing their residences at record levels, real estate agents are working feverishly to bring sellers and buyers together to avoid foreclosures, but new attitudes and policies of some lenders are inadvertently aggravating the situation, according to an official of Ventura County’s largest independent real estate company.
Bob Harrision, West Ventura County regional manager for Troop Real Estate, Inc., said that two of the best options to avoiding foreclosure, and a path the federal government is encouraging among lenders and borrowers, are the so-called “workout”, or the “short sale”
“The workout allows homeowners to stay in their homes until the market turns. The “short sale” calls for the seller to instruct the Realtor to put their house on the market at the best price and sell it in the shortest possible time to potentially avoid a further decline in value.
“The challenge here is that the loan balance is typically greater than the house’s market value. But if the lender accepts this scenario, the seller is usually relieved of their mortgage,” said Harrison.
Harrison said the workout and the short sale are the preferable options, because foreclosure looms as the next option.
“What’s happening now is that everyone, led by real estate agents, is trying to alleviate the situation without a full government bail-out and avoid more foreclosures. The problems, however, are that some short sale lenders are creating an unusual time delay response to buyers’ offers, which then fall out from buyers losing motivation and observing further declines in the home pricing. Some responses have exceeded three months if at all.
“As hard working full-time professional agents face financial challenges of their own, some lenders are arbitrarily reducing traditional real estate commissions on many short sales. The result is that they are creating more incentive for foreclosures to occur. Lenders created the problem with questionable sub-prime loans; now they’re taking a pound of flesh from the people who are trying to help navigate the situation for consumers,” Harrison said.

Once the lender owns the property through the foreclosure process, Harrison continued, they have offered all the extra incentives any motivated seller would, including aggressive pricing and concessions. The irony, he added, is that lenders are usually taking less money on a foreclosure because of the down housing market than they would if they accepted a short sale.
“The entire issue has to do with timely approvals of short sales and reasonable incentives for real estate agents who are providing well-qualified buyers,” Harrison said.

The National Association of Realtors® and other industry members of the Real Estate Standards Organization have unanimously approved a draft standardized data format for distributing real estate listing information.

Real Estate Transaction Standard, an industry effort initiated by NAR and maintained by RESO, is a collection of data standards designed to improve information management. The just approved syndication standard simplifies the process of sending real estate information by allowing brokers and MLSs to send their listing data to multiple real estate advertising Web sites without dealing with different data formats.

The standard was drafted and unanimously approved by a RESO working group composed of NAR’s Center for REALTOR® Technology and many of the real estate industry’s leading publishers and consumers of real estate listing data. They include MLS Assistant, MLS Listings Inc., MLSPIN, New Jersey MLS, TREND MLS, Move Inc. (operator of Realtor.com®), Bridge Interactive, Bainbridge, Cevado Technologies, CLRsearch, eNeighborhoods, eShowings, FBS Data Systems, Google, Homescape, Marketlinx, Oodle, Point2, PropBot, Prudential Preferred CRE, RealEstate.com, Realtracs, ThreeWide, Trulia, Vast, Yahoo! and Zillow.

The partnership of MLSs, vendors and real estate brokers came together to develop the standardized data format because they understand the business and technology needs of Realtors® today and their desire to get property information to home buyers faster and more efficiently.

“Realtors® are industry innovators and understand that more consumers than ever are seeking real estate information online,” said Mark Lesswing, NAR chief technology officer and senior vice president. “By collaborating with our RESO partners to standardize the data formats, we are making it easier for Realtors® to feed their clients’ property listings to multiple real estate sites in one format, saving them time and money.”

The draft standard will be implemented immediately by several of the partner organizations. Following their feedback, a final draft will be presented and voted on during a meeting of the partners in August.

RESO also currently supports a listing standard, which addresses the movement of real estate listing between the MLS and its subscribers. Although the listing standard and syndication standard share a common XML-based data layout, they are different.

NAR’s CRT was established to provide technology leadership, guidance and assistance for its members. CRT makes available informed industry insight, research and open-source applications through its mission of implementation, advocacy and information.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.