Posted on 06/27/2006 7:37:44 AM PDT by Hydroshock
WASHINGTON - Sales of existing homes fell for the third time in the past five months in May, with the weakness led by a big drop in demand in the Northeast.
ADVERTISEMENT
The National Association of Realtors reported Tuesday that sales of previously owned homes dropped by 1.2 percent in May to a seasonally adjusted annual rate of 6.67 million units.
The median price of the homes sold in May rose to $230,000 in May, up 6 percent from the same month a year ago. That represented a slowdown from huge double-digit price gains last year at the peak of the housing boom.
By region of the country, sales fell by the largest amount in the Northeast, a drop of 4.2 percent. Sales were down 3.8 percent in the Midwest.
Sales of existing homes managed to post small gains of 0.7 percent in the West and 0.4 percent in the South.
Analysts said this is a classic pattern for a cooling housing market with sales starting to lag under the impact of rising mortgage rates.
David Lereah, chief economist for the Realtors, said he expected sales to fall by 6.8 percent from last year's record pace. Sales had surged to record levels for five consecutive years as buyers responded to the lowest mortgage rates in four decades.
But with mortgage rates climbing steadily under the impact of credit tightening by the Federal Reserve, analysts look for housing to slow this year but not to crash.
The Realtors report showed that the number of homes still on the market at the end of May climbed to an all-time high for the month of 3.6 million units. The number of months it would take to exhaust that inventory level at the May sales pace would be 6.5 months, the highest level since May 1997.
Analysts said they believed that home sellers in many parts of the country will soon start to trim their asking prices in response to the rising level of unsold homes. That will help to boost sales.
Lereah said he expected a housing slowdown but not a housing collapse as a strong economy keeps demand for homes at a solid level.
"Right now we are on course for a soft-landing in housing," he said.
He said that 30-year mortgages, which are currently at 6.71 percent, could climb to 7 percent by the end of the year or even higher if the Fed goes farther in boosting interest rates than is currently expected.
Fed officials are expected to increase a key rate for a 17th time when they meet on Wednesday and Thursday.
Why...oh, why....?
Go figure:
http://www.nytimes.com/2006/06/27/business/27econ.html
"Sales of New Homes Show Unexpectedly Strong Rise
By THE ASSOCIATED PRESS
Published: June 27, 2006
WASHINGTON, June 26 (AP) — Sales of new homes rose in May, surprising economists who had forecast that housing would slow because of rising mortgage rates.
The Commerce Department reported Monday that sales of new single-family homes increased 4.6 percent in May, to a seasonally adjusted annual rate of 1.234 million units. But the median price of homes sold declined — to $235,300, a drop of 4.3 percent from the April sales price.
Analysts are still looking for sales of both new and existing homes to fall about 10 percent this year as rising mortgage rates crimp demand. The lowest mortgage rates in four decades helped propel sales to five consecutive annual records.
The 4.6 percent increase pushed the sales rate to the highest level since December. It came after increases of 5.9 percent in April and 7.3 percent in March. The previous months' increases were helped by unusually mild weather..."
Anyone interested?
This is expected in the beginning of a real slow down. People who are still in the market look to new first. The builders are lowering prices and offering incentives. If you had x amounto of money to spend and it could get you a new house that you could make the design choices on you would buy it over a used home. This is a classic pattern, used homes drop first followed closed by new.
This number is the leading indicator. Things are going to get ugly in the next 6-12 months.
But what people don't understand is that a lot (not all) of new builds are NOT quality built and just because its new doesn't mean you won't have problems
In fact I have talked with plumbers, electricians who say that most of their business comes from owners of homes that are 1-5 years old!
I know this, but most do not. They see new as better.
This isn't true in my Oregon neighborhood. A house three doors down just sold for twice what it's worth. I will be very happy if we can get that or a bit more in a couple of years when we go to sell. I'd love to sell my dinky little yardless house and buy a nice spread in a red state. :-)
Then I would sale now.
Multiple reports just coming in from India, Pakistan, central Russia, etc. of it getting dark. Seems to be getting worse, ever darker, ever colder. Hey Hydrospam, perhaps you need to start a new Breaking thread on this latest developing disaster, too.
Location...Location...Location...
"Realty Times" reports:
"Market Conditions for Houston, Texas as of June 20, 2006.
...
The Houston real estate market continued strong in May 2006, with all time highs recorded for median and average sales prices for single family homes,according to the Houston Association of Realtors. The median price which is a price where half the homes sold for more and half sold for less was $152,000, a 5.6% increase over May 2005. The average sales price was $204,500, the first time it has been over $200,000. This is an 8.2% increase over last year's value. Single family home sales in May were 7199, up from 6443 last year.
Townhomes and condo sales are also up both in numbers and price. In May 2006, 776 units were sold with an average sale price of $152,062. This is a 2.8% increase over May 2005.
In closing, the Houston housing market is strong in both sales and pricing, while other areas of the country are experiencing decreases in both sales and prices. According to the National Association of Realtors, Houston's current median sales price for a single family home is 31.7% less than the national average. So far, Houston has avoided the national "bubble" worry and remains one of the more affordable national markets. "
This article reports that the Houston area has been one of America's "most affordable" places to buy a home. It also reports that units sales and unit prices are still going up.
So it appears to be true that, in the Houston market:
"He, who hesitates, is lost."
Realty Times, that is unbiased source. (Sarcasm off)
Do you dispute the statistics cited in the article? Are you implying they are making them up?
I am saying that if you have an agenda you can make a set of fact match that agenda. And lets see, one market is fine, but many parts of the northeast, Ca, Fl, and other parts of America are circling the bowl as we speak.
Sales for May 06 are up almost 8% compared to May 05 in my area, and average sales price is also up by 5%. But then again, we never had a "boom" to go bust, so I guess we're countercyclical, lol.
FOreclosures are also way up om FL, TX, and MA.
I don't think pfony1 was saying anything about the nationwide market. Houston appears to be fine, at least based upon the statistics in that article. Don't you live in Texas? Shouldn't this be news be well received by you?
Why do you never accept any kind of good news at face value? You accuse others of being biased, yet your posts are the epitome of bias (i.e., you only post articles that fit your agenda of doom and gloom).
"FOreclosures are also way up om FL, TX, and MA."
Well, don't let me stop the rain on your parade. I have never understood this apparent need for nationwide doom in residential real estate, though. Fact of the matter is, vast swathes of the US never experienced the bizarre runup in prices over the past four or five years, and are in little danger of a price collapse now. Employment is the key, and always has been, for any major depreciation in housing prices, and even then it's regional, if not local.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.