WASHINGTON – Jan. 21, 2008 – President George W. Bush and Congress are discussing economic stimulus packages to ward off a recession, and the National Association of Realtors® (NAR) is urging them to help homeowners and the national economy by loosening constraints on Fannie Mae and Freddie Mac.
“We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two government-sponsored enterprises,” says NAR President Dick Gaylord. “The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost homebuyers’ confidence levels, resulting in increased sales and economic activity.”
NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000. “This change will permit more families to enter the housing market by making more mortgages available with lower interest rates. Increased home sales will lower inventories and immediately start stabilizing the housing market and the economy,” Gaylord says.
In addition, NAR has been actively advocating for quick passage of the Federal Housing Administration (FHA) reform bill. A reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and ensuing credit crunch. “FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” says Gaylord.
In a letter to congressional leaders, NAR estimated that lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion. An additional NAR report shows that increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.
“This is the quickest way to help the hurting housing market,” says Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars. We strongly urge Congress to take these actions, in any stimulus plan, to stabilize the housing market and protect homeowners.”
© 2008 FLORIDA ASSOCIATION OF REALTORS®
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January 21, 2008
NAR: Stimulus Package Must Include Loan Limit Increase
January 9, 2008
NAR: Stable Existing-Home Sales Expected In Early 2008, Then Gradual Rise
WASHINGTON – Jan. 9, 2008 – Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors® (NAR).
Lawrence Yun, NAR chief economist, says there is a pull and tug exerting itself on the market. “On the one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sales decline,” he says. “On the other, consumers continue to wait for additional signs of market stabilization. There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase. As a result, the exact timing and the strength of a home sales recovery is a bit uncertain. A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization. The index was 19.2 percent below the November 2006 level of 108.4. “Although there could be some minor slippage in the first quarter, existing-home sales should hold in a narrow range before trending up,” Yun says.
The PHSI in the South rose 2.3 percent in November to 100.7 but is 19.8 percent below a year ago. In the West, the index slipped 2.1 percent to 86.6 but is 18.5 percent lower than November 2006. The index in the Midwest fell 4.1 percent in November to 82.1 and is 18.6 percent below a year ago. In the Northeast, the index dropped 13.0 percent in November to 70.1 from a spike in October, and is 19.1 percent below November 2006.
Existing-home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.70 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400.
“Rising home prices in the affordable midsection of the country are likely to offset declines in some of the previously hot markets,” Yun says.
There are wide variations in housing market conditions around the country, with nearly two-thirds of the metropolitan areas showing price gains. Healthy increases in metro prices are occurring in places such as Pittsburgh; Beaumont-Port Arthur, Texas; San Jose, Calif.; and Bismarck, N.D.
“Our consumer survey shows buyers today are in it for the long-haul, planning to stay in their home for a median of 10 years. This is a wise approach to housing because the data shows the longer you own, the better your investment,” Yun says.
New-home sales are projected at 773,000 for 2007, and declining to 669,000 this year before rising to 730,000 in 2009, but well below the 1.05 million 2006. With an appropriate slowdown in production, housing starts, including multifamily units, are forecast at 1.36 million for 2007 and 1.09 million this year before edging up to 1.10 million in 2009; starts totaled 1.80 million in 2006. The median new-home price should drop 2.1 percent to $241,400 for 2007, and then rise 0.4 percent to $242,200 this year and gain another 5.9 percent in 2009.
“Some policy changes, such as raising the loan limit on conventional mortgages, would provide a significant boost to home sales, increase liquidity, strengthen home prices and lessen foreclosures, but it is unclear as to if and when the measure will be implemented,” Yun says. NAR strongly supports raising the Government-Sponsored Enterprise loan limit to at least $625,000 from the current $417,000 so that more consumers will have access to lower interest rates on safe conforming mortgages. “NAR estimates that raising the GSE loan limit will result in interest rates savings for an additional 330,000 homeowners,” he says.
NAR also encourages the Fed to make a single lump-sum cut in the Fed funds rate to 3.5 percent at the January Federal Open Market Committee meeting, rather than a series of modest cuts throughout the year. “Consumers are also looking to market-time interest rates, and the expectations of further rate cuts are pushing some home buyers to delay. Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts,” Yun added.
The 30-year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year, but an additional cut in the Fed funds rate would lower short-term interest rates.
Growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent growth rate in 2006; GDP growth will probably be 2.0 percent this year.
After averaging 4.6 percent for both 2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the second half of 2008. Inflation, as measured by the Consumer Price Index, is projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent in 2006. Inflation-adjusted disposable personal income is forecast to grow 3.1 percent for 2007, the same as in 2006, and then grow 1.6 percent this year.
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December 11, 2007
NAR: Worst Is Over – Existing-Home Sales To Trend Up In 2008
WASHINGTON – Dec. 11, 2007 – Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors® (NAR). However, a recovery for new-home sales is unlikely before 2009.
Lawrence Yun, NAR chief economist, says the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he says. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but still 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun says.
The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.
“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun says. “Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.”
Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006. Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.
“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun says.
“Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases,” he said. “The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.”
Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash. “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.”
New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million in 2006; no sustained improvement is seen for new homes until 2009. Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year. The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.
The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.
Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.
The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008. Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.
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November 29, 2007
New Home Sales: Up For Month, Down For The Year
WASHINGTON – Nov. 29, 2007 – October new home sales stats released by the Census Bureau and HUD today were up – 1.7 percent higher than September sales; however, new home sales were down 23.5 percent compared to those one year earlier in October 2006.
Sales of new one-family houses in October 2007 were at a seasonally adjusted annual rate of 728,000, according to estimates.
The median sales price of new houses sold in October 2007 was $217,800, a drop of 13 percent compared to October 2006; the average sales price was $305,800. The seasonally adjusted estimate of new houses for sale at the end of October was 516,000, which is an 8.5-month supply at the current sales rate.
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November 28, 2007
Florida’s Consumer Confidence Dips 2 Points
GAINESVILLE, Fla. – Nov. 28, 2007 – Florida’s consumer confidence dropped two points to 77 in November, a new University of Florida study finds.
“The growing pessimism about U.S. economic conditions seems to be among all income levels,” says Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. He says the decline in Florida’s housing market has increased consumers’ financial insecurity.
Survey respondents were particularly pessimistic about U.S. economic conditions over the next year. That component of the index fell 11 points to 62, in contrast to the index measuring perceptions of U.S. economic conditions over the next five years, which rose two points to 80.
“Florida consumers seem to understand the gravity of the fallout from the housing crisis and resulting credit crunch, but they still believe in the long-term viability of the U.S. economy to turn this around,” McCarty says.
The housing slowdown creates indirect effects, McCarty says, beyond hurting Floridians who cannot sell their homes and those who have lost their homes to foreclosure. Lenders who resold loans or packaged mortgage debt in elaborate securities now face a backlash from investors, many of whom are international, creating a shortage of credit, which previously fueled not only home loans but many other kinds of spending from corporations buying other corporations to individuals buying cars, McCarty says.
“We expect the housing market to bottom out by the second quarter of 2008 at which time existing home prices will be low enough that some prospective buyers will make purchases,” McCarty says. “However, 2005 prices are years away.”
This month’s drop in the overall confidence rate follows a two-point rise in October.
“We were a bit perplexed by the rise in confidence last month,” McCarty says. “It now appears that rise was a reaction to a short-term decline in gas prices early in October. Now that gas prices have gone up, as expected, confidence is at the same level as in September.”
Of the three remaining components making up the index this month, one fell, one rose and one remained the same. Perceptions of personal finances a year from now fell four points to 86, while perceptions of personal finances now compared with a year ago rose two points to 71. Perceptions of whether it is a good time to buy big-ticket items remained unchanged at 84. Perceptions of personal finances showed a small improvement among low-income households, but a slight decline among middle and upper-income households.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for November was conducted from 475 responses.
Consumer confidence is designed to help predict buying patterns by measuring the mood of consumers toward purchasing. Although other economic indicators also predict buying patterns, consumer confidence tends to be available sooner. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for the year. The value of the index is in comparing changes over time rather than looking at an isolated month.
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November 8, 2007
UF: Florida Population Growth Slows But Still Remains High
GAINESVILLE, Fla. – Nov. 8, 2007 – According to the University of Florida (UF), Florida’s population growth slowed considerably last year as the housing boom went bust, but it remained relatively strong and likely will stay that way for the next few years.
“There have been a number of news articles lately focusing on the idea that population growth has fallen off the table top in Florida and practically come to a standstill, and that simply isn’t true,” says Stan Smith, director of the UF’s Bureau of Economic and Business Research, who led the research. “Florida has a strong economy and adds jobs every year. That is a major factor in last year still being a big year for population growth, even though it was less than in the previous three years.”
The estimates released this week show the Sunshine State’s population grew by 331,000 between 2006 and 2007, compared with 431,000 between 2005 and 2006; 402,000 between 2004 and 2005; and 448,000 between 2003 and 2004, Smith said. Florida’s total population was estimated at 18,680,367 as of April 1, 2007.
Based on recent trends, Smith said he expects Florida to add about 300,000 residents a year during the next two to three years unless there is a recession.
“The housing boom certainly contributed to Florida’s growth in those earlier years, and the housing bust contributed to the slowdown this last year,” he says. “When economic conditions are tough, it’s much harder for people to sell their homes in New York, Ohio, Michigan or some other state and move to Florida.”
Today’s increasing number of foreclosures, large inventories of unsold houses and the decline in housing prices in some cities contrast starkly with the flourishing construction industry, huge numbers of home sales and flurry of people buying homes simply to make a quick profit that characterized the last few years, he said.
But Florida’s healthy job market and the continued movement of retirees and foreign immigrants to the state helped bolster population growth last year.
“Job growth has been higher in Florida than the national average,” Smith says, adding that the largest increases in jobs during the past year have been in leisure and hospitality services, education and health service. “You also have to factor in Florida’s climate, with its relatively warm winters, which continues to attract people from the Northeast and Midwest from one year to the next.”
Although less significant than employment, retiree migration stands to become increasingly important in the future.
“Over the next 20 years as the baby boomers reach retirement age, the probability is high that many of them will want to move to Florida,” Smith says.
Florida, with its large foreign-born population, also has grown because of the increase in U.S. immigration during the past decade because many newcomers move to places where they already have a network of family and friends, Smith says. Typically, Florida attracts about 8 percent or 9 percent of the nation’s immigrants in a year.
“What is considered a slow year for population growth in Florida would be considered a fast year for most states,” he says. “Between 1990 and 2000, no county in Florida lost population, which is unusual considering that typically 30 (percent) to 40 percent of the nation’s counties lose population during any particular decade.”
Flagler, the state’s most rapidly growing county, has ballooned by 88 percent since 2000, from 49,832 to 93,568; followed by Sumter, which increased 68 percent from 53,345 to 89,771, and Osceola, up 54 percent from 172,493 to 266,123.
Contributing to Flagler’s growth is its location between Jacksonville and Daytona Beach, which is attractive to retirees as well as to commuters. Boosting Sumter County’s population gains are spillover from Orlando to the southeast, as well as the booming Villages retirement community, which covers parts of three counties. Third-ranked Osceola County has drawn a sizeable population of Puerto Rican immigrants in recent years.
Counties with the biggest increases in absolute numbers were Orange County, which grew by 209,259 between 2000 and 2007, followed by Miami-Dade with an increase of 208,513 and Hillsborough with an increase of 193,913. Monroe was the only county in Florida to lose population between 2000 and 2007, declining by 602.
October 31, 2007
Consumer Confidence Increases In Florida
GAINESVILLE, Fla. – Oct. 31, 2007 – A weak housing market doesn’t deter Floridians. Consumer confidence in the state rose three points in October, with much of the increase attributed to low-income households.
Consumer confidence among Floridians rose to 80 in October, while the September index was revised downward to 77. The index includes five components, and three showed improvement this month. Perceptions of personal finances now compared to a year ago fell a point to 70, but expectations of personal finances a year from now rose four points to 90. Expectations of U.S. economic conditions over the next five years fell two points to 78, but perceptions of U.S. economic conditions over the next year rose six points to 75. Perceptions of whether it is a good time to buy big-ticket items rose four points to 85.
“Consumer confidence in Florida is now very close to the national number of 80.9 as measured by the University of Michigan,” says Chris McCarty, the survey director. “The source of the rise in Florida appears to be low-income households (those living on less than $30,000 annually). Confidence among that group had been quite low at 66, but rose in October to 75. Middle and upper income households remained the same at 81.
“The rise in confidence among low-income households appears to be driven by improved personal finances now compared to a year ago and expectations about improvement over the next year. There was a very large increase in perceptions among low-income households that it is a good time to buy big-ticket items. That component rose 18 points to 86 among low income households.”
McCarty is not sure why Florida’s lower-income households believe things are getting better, but he speculates that they think the housing slowdown may be over soon.
“Respondents may have already factored in the ill effects of housing and are anticipating improvement,” McCarty says. “They may also be looking toward property tax reform from the Florida Legislature as a source of relief. Although gas prices declined briefly in October, they are up again and all signs are that they will increase. Next month’s consumer confidence will be telling.”
© 2007 FLORIDA ASSOCIATION OF REALTORS®
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October 30, 2007
Consumers Less Confident In October
WASHINGTON – Oct. 30, 2007 – The Conference Board Consumer Confidence Index, which has been declining since August, fell further in October. The Index now stands at 95.6 (1985=100), down from 99.5 in September. The Present Situation Index decreased to 118.8 from 121.2 in September. The Expectations Index, which gauges attitudes about future conditions, declined to 80.1 from 85.0.
Says Lynn Franco, director of The Conference Board Consumer Research Center: “Consumer confidence posted its third monthly decline and continues to hover at two-year lows (Oct. 2005, 85.2). Further weakening in business conditions has, yet again, tempered consumers’ assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead. In addition, consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year.”
Consumers’ assessment of present conditions weakened further in October. Those claiming conditions are “good” decreased to 23.4 percent from 25.7 percent. However, those saying conditions are “bad” decreased to 16.3 percent from 17.8 percent. Overall, consumers were less upbeat in their appraisal of the job market. Those saying jobs are “hard to get” increased to 22.6 percent from 22.4 percent. Those claiming jobs are “plentiful” decreased to 24.1 percent from 25.6 percent in September.
Consumers’ short-term expectations eroded further in October. Consumers expecting business conditions to worsen in the next six months rose to 13.8 percent from 11.9 percent. Those anticipating business conditions to improve declined to 13.7 percent from 15.7 percent.
The outlook for the labor market was also less optimistic. The percent of consumers expecting more jobs in the months ahead was virtually unchanged at 13.5 percent, while those anticipating fewer jobs increased to 20.1 percent from 18.7 percent. The proportion of consumers expecting their incomes to increase in the months ahead declined moderately to 19.6 percent from 20.0 percent.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for October’s preliminary results was October 23rd.
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September 11, 2007
Pending Home Sales Index Falls Largely On Mortgage Tightening
WASHINGTON – Sept. 5, 2007 – Pending home sales, a forward-looking indicator, shows existing-home sales are likely to decline in coming months as mortgage disruptions work their way through the housing market, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, based on contracts signed in July, fell 12.2 percent to a reading of 89.9 in July from the June index of 102.4, and was 16.1 percent lower than July 2006 when it stood at 107.1.
Lawrence Yun, NAR senior economist, says abnormal factors are clouding the horizon. “It’s difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment,” he says.
“These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans. Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.
“If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later,” Yun says.
The 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.
Annual changes in the index are more closely related to actual market performance than are month-to-month comparisons. As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful.
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.
The PHSI in the South declined 6.6 percent in July to 104.0 and was 15.2 percent below a year ago. In the Northeast, the index fell 12.2 percent from June to 84.3 and is 10.0 percent lower than July 2006. The index in the Midwest dropped 13.1 percent in July to 80.4 and was 15.8 percent below a year ago. In the West, the index fell 20.8 percent in July to 82.3 and was 21.8 percent below July 2006.
© 2007 FLORIDA ASSOCIATION OF REALTORS
March 2, 2007
FL Existing Home Sales Pace Slows in Jan 07
ORLANDO, Fla. – Feb. 27, 2007 – The pace for Florida’s existing home sales remained slow in January, though the inventory of homes began to drop in many markets across the state, according to the Florida Association of Realtors® (FAR). Statewide, sales of single-family existing homes totaled 9,382 last month compared to 12,906 homes sold in January 2006 for a 27 percent decrease.
Existing home sales likely will gradually rise this year and into 2008, according to the latest housing outlook from the National Association of Realtors® (NAR). “Home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand,” says NAR Chief Economist David Lereah. As inventory levels become more balanced over the next few months, analysts also expect to see some modest price gains.
Florida’s median sales price for existing single-family homes in January was $239,300; a year ago, it was $243,200 for a 2 percent decrease. The median is the midpoint; half the homes sold for more, half for less.
In January 2002, the statewide median sales price for single-family homes was $128,900, which represents an increase of about 85.6 percent over the five-year-period, according to FAR records.In December 2006, the national median sales price for existing single-family homes was $221,600, unchanged from the previous year, according to NAR. In California, the statewide median resales price was $567,690 in December; in Massachusetts, it was $335,000; and in Maryland, it was $304,789.
Sales of existing condominiums in Florida also decreased last month, with a total of 3,007 condos sold statewide compared to 4,279 in January 2006 for a 30 percent decline, according to FAR. The statewide median sales price for condos last month remained stable at $209,000; a year ago, it was $212,000 for a 1 percent dip. NAR reported the national median existing condo price was $227,000 in December 2006.
Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.22 percent, up slightly from the average rate of 6.15 percent in January 2006. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the Jacksonville Metropolitan Statistical Area (MSA) reported slower sales of single-family homes in January, though more existing condos changed hands. A total of 783 existing homes sold last month compared to 938 homes sold a year ago for a 17 percent decrease.
The market's median sales price for homes was $185,000; it was $194,100 in January 2006 for a 5 percent decline. A total of 152 existing condos changed hands in Jacksonville last month, a 10 percent increase over the 138 condos sold the previous year. The existing condo median sales price in January was $147,600; a year ago, it was $170,000 for a 13 percent decrease.
“The Jacksonville area continues to offer some of the best values in the state for housing opportunities – what buyers can get for their dollar is a strong draw for our market,” says Hank Oltmanns, president of the Northeast Florida Association of Realtors and broker-owner of A Broker’s Choice Realty.
“We’re the largest geographic city in the lower 48 states, the land prices here are better than in many other areas and we still have room to grow; all of these factors give us a depth of market variety. Plus, our strong diversified labor market and business base is a definite asset.”
Among the state’s smaller markets, the Pensacola MSA reported a total of 279 homes sold in January compared to 317 homes a year ago for a decrease of 12 percent. The existing home median sales price rose 1 percent to $159,200; a year ago, it was $158,100. A total of 27 existing condos sold in Pensacola last month compared to 43 condos the previous January for a 37 percent decline. The market’s existing condo median price rose 13 percent to $195,000; a year ago, it was $172,500.
Doug Gooch, president of the Pensacola Association of Realtors and office manager for Palm Realty of Pensacola, says people are drawn to the area's scenic beauty and more relaxed lifestyle. “We have some of the most beautiful and pristine beaches in the state," he says. “Plus, we offer buyers a variety of housing options in different price ranges to suit their budgets. It’s a great place to live, and with mortgage rates continuing to be so favorable, right now is a great time to buy.”
© 2007 FLORIDA ASSOCIATION OF REALTORS
February 9, 2007
Existing Homes vs New Homes Projection
David Lereah, NAR’s chief economist, looks for a steady rise in existing-home sales. “After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008,” he says. “New-home sales should continue to slide, but we look for that sector to turn around later in the year. When you put it all together, home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand.”
Existing-home sales, after reaching the third highest total on record, 6.48 million in 2006, are forecast at 6.44 million in 2007 and 6.64 million in 2008. New-home sales, following a fourth-best 1.06 million in 2006, are projected to decline to 961,000 this year and then rise to 971,000 in 2008.
Housing starts are likely to total 1.52 million in 2007, down from 1.80 million units in 2006, and then increase to 1.56 million next year. “When new home demand begins to catch up with supply, builders will slowly increase construction – probably in the second half of this year,” Lereah said.
The 30-year fixed-rate mortgage is forecast to rise to 6.7 percent by the second half of the year. Freddie Mac reported the 30-year fixed rate at 6.14 percent in December, but it has been trending up since. “Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions,” Lereah said. “When existing-home supplies become more balanced between buyers and sellers this spring, we’ll see some modest price gains.”
The national median existing-home price should grow 1.9 percent to $226,200 in 2007, after rising only 1.1 percent in 2006. The median new-home price is expected to increase 1.8 percent to $249,800 in 2007, following a similar gain last year. Stronger gains are forecast for 2008, with existing-home prices rising 3.2 percent and new-home prices increasing 3.4 percent.
The unemployment rate is seen to average 4.7 percent in 2007, compared with 4.6 percent last year. Inflation, as measured by the Consumer Price Index, is projected at 2.0 percent this year, down from 3.2 percent in 2006, while growth in the U.S. gross domestic product is likely to be 2.8 percent in 2007, down from 3.4 percent last year. Inflation-adjusted disposable personal income will probably rise 3.7 percent in 2007, up from a gain of 2.7 percent in 2006.
© 2007 FLORIDA ASSOCIATION OF REALTORS®
February 2, 2007
Pending Home Sales Index Rises
WASHINGTON – Feb. 2, 2007 – Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the National Association of Realtors® (NAR). The Pending Home Sales Index, based on contracts signed in December, rose 4.9 percent to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4 percent lower than December 2005.
“Some of the monthly gain may be weather-related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out,” he said. “I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth best year on record.”The 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 and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.
The upturn was broad based, with all regions showing an increase. The PHSI in the Northeast jumped 8.1 percent in December to 89.9 but was 4.8 percent below a year ago. The index in the West rose 5.3 percent to 112.2 but was 4.9 percent below December 2005. The index in the South increased 4.3 percent to 129.8 but was 4.2 percent lower than a year earlier. In the Midwest, the index was up 3.2 percent in December to 103.2 but was 4.3 percent below December 2005.
© 2007 FLORIDA ASSOCIATION OF REALTORS®
January 26, 2007
Florida's Existing Housing Market
ORLANDO, Fla. – Jan. 25, 2007 – Florida’s housing market mirrored the national trend in 2006, with sales of existing single-family homes slowing to a more sustainable pace following a five-year run of record closings. By year’s end, a total of 180,037 homes changed hands statewide for a 28 percent decrease compared to the 248,575 homes sold in 2005, according to the Florida Association of Realtors® (FAR).
At the same time, 2006 sales figures made it into the record books for several markets around the state; 2006 also is expected to be the third highest sales year on record nationally, according to the National Association of Realtors® (NAR).
Statewide, the median existing home sales price rose 6 percent to reach $248,300; in 2005, it was $235,200. In 2001, Florida’s median existing home sales price was $127,700, which represents a gain of 94.4 percent over the five-year period, according to FAR records.
“The housing market transitioned to a more sustainable balance during 2006, coming off the record-setting sales pace and price gains of the previous five years,” says 2007 FAR President Nancy Riley. Changes in the marketplace mean it’s more important than ever for consumers to turn to a Florida Realtor – someone they can rely on to help them understand the true history of homebuying and selling in their local areas.
“With mortgage rates continuing to remain historically low, stable home prices and at last, some inventory, now is the time to take advantage of the homeownership opportunities we have throughout the Sunshine State,” she adds. “Along with the tangible benefits of owning a home, such as building household wealth and stability, there are so many other intangible assets. When you buy a home, you’re not just creating an investment that makes dollars and cents; you’re making an investment in your family and in your future – and that’s priceless!”
NAR’s latest housing market outlook anticipates modest quarterly gains for home sales in 2007, with the 30-year fixed-rate mortgage expected to rise to 6.7 percent by the fourth quarter of this year. “Home sales appear to have bottomed out, having reached a cyclical low in September of last year,” notes NAR Chief Economist David Lereah, who predicts that 2007 will represent a year of stability for the housing sector.
Looking to Florida's existing condominium market, sales of existing condos also decreased in 2006, with a total of 55,594 condos sold statewide compared to 83,049 in 2005 for a 33 percent decrease, according to FAR. The statewide median sales price for condos in 2006 was $211,300; a year ago, it was $209,900 for a 1 percent increase.
In 2006, the rate for a 30-year, fixed-rate mortgage averaged 6.1 percent; in 2005, the average rate was 5.87 percent. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger metropolitan statistical areas (MSAs), Orlandoreported a total of 27,212 existing homes sold last year, down 26 percent than the area’s 2005 sales activity, when 36,727 homes changed hands. The existing-home median sales price rose 14 percent to $262,900; the year before, it was $231,400. A total of 4,933 existing condos sold in the Orlando market in 2006, a 2 percent increase over the 4,833 condos sold the year before. The existing condo median price for the area was $166,100, a 3 percent decrease from the 2005 figure of $171,100.
“The year 2006 was the second best year on record for the Orlando area housing market,” says Randy Martin, president of the Orlando Regional Realtor Association and broker-associate with RE/MAX 200 Realty Inc. in Winter Park.
“A driving force behind the market this year is that builders have all this new inventory out there, so they’re offering these incredible incentives to clear and move their inventory of new homes. At the same time, they’re reducing plans to build new development. The anticipation is that builders will ‘burn’ their supply of available homes sometime in mid-2007. It’s why right now is an outstanding time to buy, plus the interest rates are still low. And looking to 2007, we anticipate another strong year, with opportunities for buyers and sellers.”
In the state's smaller markets, the Gainesville MSA reported 3,174 homes sold last year, a 21 percent decrease over the 3,993 homes sold the previous year. The existing-home median sales price rose 19 percent to $213,200; the year before, it was $179,200. The Gainesville market reported a total of 1,284 existing condos changed hands in 2006, up 10 percent from the 1,171 condos sold the previous year. The existing condo median price was $153,400; in 2005, it was $135,300 for a 13 percent increase.
“Gainesville is just a great place to live – being a university town, there’s so much going on whether your interests are the arts, music or sports,” says Sherry Patrick, president of the Gainesville Alachua County Association of Realtors and broker-associate with Coldwell Banker M.M. Parrish Realtors in Gainesville.
“The university provides a stable economic base and attracts many other businesses and industry to our area. Our housing market has stayed pretty strong, and we anticipate another good year in 2007. It’s a great time to buy: interest rates are still low and homeownership opportunities are available.”
© 2007 FLORIDA ASSOCIATION OF REALTORS
January 3, 2007
Nationally, Existing and New Homes Sales Rise
WASHINGTON – Jan. 2, 2007 – Existing-home sales continued to recover nationally last month following a rise in October, with the level of sales activity suggesting a turn in the market, according to the National Association of Realtors® (NAR).
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November from a level of 6.24 million in October, but were 10.7 percent below the 7.03 million-unit pace in November 2005.
David Lereah, NAR’s chief economist, said modest gains are expected for home sales. “As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 – it looks like we may have reached the low point for the current cycle in September,” he said. “We’ve entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down.”
Total housing inventory levels fell 1.0 percent at the end of November to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.
The national median existing-home price for all housing types was $218,000 in November, which is 3.1 percent lower than November 2005 when the median price was $225,000.
The median is a typical market price where half of the homes sold for more and half sold for less. “For every 1.0 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market,” Lereah said.
Sales of new one-family houses in November showed less strength than existing homes sales, but also rose from October numbers. According to the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales rose 3.4 percent in November compared to October numbers; but new home sales feel 15.3 percent compared to sales one year earlier in November 2005.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October; the rate was 6.33 percent in November 2005.
NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said the performance of long-term interest rates is a pleasant surprise. “Mortgage interest rates are the lowest they’ve been since January, and it’s the first time since August of 2005 that interest rates are lower than a year earlier,” said Combs. “This is increasing buying power at the same time that sellers are showing a willingness to negotiate price and terms. Combined with a plentiful supply of homes on the market, there’s a window for buyers now with conditions that we haven’t seen prior to the beginning of the housing boom in 2001.”
Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 5.52 million in November from a pace of 5.51 million in October, but were 10.2 percent lower than the 6.15 million-unit level in November 2005. The median existing single-family home price was $217,200 in November, which is 3.6 percent lower than a year ago.
Existing condominium and cooperative housing sales rose 3.1 percent to a seasonally adjusted annual rate of 757,000 units in November from a downwardly revised 734,000 in October, but were 13.6 percent below the 876,000-unit pace in November 2005. The median existing condo price was $224,600 in November, which is unchanged from a year ago.
Regionally, existing-home sales in the Northeast increased 6.0 percent to a level of 1.06 million in November, but were 4.5 percent below November 2005. The median existing-home price in the Northeast was $269,000, down 2.2 percent from a year earlier.
Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November but were 17.5 percent lower than a year earlier. The median price in the West was $351,000, down 0.8 percent from November 2005.
Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, and were 9.6 percent lower than November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago.
Existing-home sales in the South fell 1.6 percent to an annual sales rate of 2.47 million in November, and were 10.2 percent below a year ago. The median price in the South was $179,000, down 3.2 percent from November 2005.
© 2007 FLORIDA ASSOCIATION OF REALTORS®
