Category Archives: Real Estate

Commercial Real Estate Experts: Moderate Expansion, Easing Prices Expected in 2016

WASHINGTON (February 4, 2016) — Despite various global and domestic hurdles hindering economic growth, steady job gains and stable leasing demand should help keep commercial real estate activity expanding in 2016, according to the authors of an annual report published jointly by Situs Real Estate Research Corporation (RERC), Deloitte and the National Association of Realtors®.

According to the report, Expectations Market Realities in Real Estate 2016—Navigating through the Crosscurrents, commercial real estate activity is forecast to gradually grow this year with demand for space holding steady across all commercial sectors. While commercial property values and price gains are expected to flatten after surpassing 2007 peaks in some major markets, investors will still benefit from the strong income flows generated from new and existing leases.

The fifth annual release of the joint report draws on the three organizations’ respective research and expert analysis and offers an objective outlook on commercial real estate through forecasts and commentary on the current economy, capital markets and commercial real estate property markets. A research-based assessment of the office, industrial, apartment, retail and hotel property sectors is also provided.

“Historically low interest rates, especially in treasuries, combined with commercial real estate’s stable prices and value make this asset an attractive investment,” says Ken Riggs, president of Situs RERC. “Looking into 2016, the commercial real estate market should moderate, which could stabilize prices.”

Vacancies are expected to continue to decline slightly in 2016 for all property types, except in the apartment sector, where they are forecast to increase modestly by the end of the year as more new project completions come onto the market. Continued job growth, demand exceeding supply and limited new construction (outside of multifamily) should lead to rising rents and steady investor returns, which overall will shift away from capital appreciation as price growth levels off in many markets.

Continuing on the same slow trajectory seen for many years, the U.S. economy – facing headwinds from a rising dollar, financial market volatility and geopolitical concerns – is forecast to grow at a rate of 2 percent to 3 percent in 2016, which is stronger than most global economies and enough to generate around two million net new jobs over the next year. Deflationary pressures related to low gasoline and energy prices are expected to diminish by mid-2016, in part because of robust growth in apartment rents. 

“Supported by solid hiring in most parts of the country, the demand for ownership and rental housing will continue to increase in 2016 despite another year of meager economic expansion,” says Lawrence Yun, NAR chief economist. “While supply shortages will weigh on housing affordability and push home prices and rents higher, the housing sector will keep the U.S. economy afloat and lead the residential investment component of GDP growth by up to 10 percent this year.” 

On Thursday, Feb. 4, 2016 at 2:00 p.m. ET, Deloitte will be hosting a live webcast covering the report, including discussion on macroeconomic conditions, capital market trends, the main property types and the overall outlook for 2016. For more information and to register, please visit the Deloitte Dbrief page.

About the National Association of Realtors®

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

About Situs RERC

Situs, the premier global provider of end-to-end strategic business solutions and integrated process and technology solutions for the Financial Services Industry, has offered customized services to leading financial institutions, investors, owners, and developers since 1985. Situs offers a broad portfolio of strategic solutions including Debt Advisory, Loan Servicing, Consulting Staffing, Valuation Management, Business Process Outsourcing, and Asset Management, among others.

Situs’ business provides customized solutions that mitigate deal execution risk for clients while maximizing operating margins. Situs is headquartered in Houston and has offices throughout the United States, Europe, and Asia.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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Expectations and Market Realities in Real Estate


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Remodeling and Demographics: DIY?


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Housing Market Summary for December


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REALTORS® Land Institute Survey


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Pending Home Sales Tick Up in December

WASHINGTON (January 28, 2016) — Pending home sales were mostly unchanged in December, but inched forward slightly, fueled by a large increase in the Northeast that outpaced declines in the other three major regions, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, crawled 0.1 percent to 106.8 in December from a downwardly revised 106.7 in November and is now 4.2 percent above December 2014 (102.5). The index has increased year-over-year for 16 consecutive months.

Lawrence Yun, NAR chief economist, says contract activity closed out the year on stable footing but lost some momentum, except for in the Northeast. “Warmer than average weather and more favorable inventory conditions compared to other parts of the country encouraged more households in the Northeast to make the decision to buy last month,” he said. “Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With homebuilding still grossly inadequate, steady price appreciation and tight supply conditions aren’t going away any time soon.”

According to Yun, although healthy labor market conditions will persuade more households to buy, it’s possible overall demand could be somewhat curtailed in coming months. The stock market’s sizeable losses since the start of the year and the effect slowing manufacturing activity is having in some areas — especially in the energy sector — could cause some to hold off on buying.

“The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined,” says Yun. “Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4 percent.”

Existing-homes sales this year are forecast to be around 5.34 million, an increase of 1.5 percent from 2015. The national median existing-home price for all of this year is expected to increase between 4 and 5 percent. In 2015, existing-home sales increased 6.5 percent and prices rose 6.8 percent.

Rents — which have far outpaced wages in recent years — are expected to slightly slow to 3.3 percent growth in 2016 from 3.6 percent a year ago. Multifamily housing starts are expected to reach 420,000 units this year, the highest level since 1987.

The PHSI in the Northeast increased 6.1 percent to 97.8 in December, and is now 15.3 percent above a year ago. In the Midwest the index decreased 1.1 percent to 103.6 in December, but is still 3.6 percent above December 2014.

Pending home sales in the South declined 0.5 percent to an index of 119.3 in December but are 1.0 percent higher than last December. The index in the West decreased 2.1 percent in December to 97.5, but remains 3.4 percent above a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 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 parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: Fourth quarter of 2015 metropolitan area home prices will be released February 10, Existing-Home Sales for January will be reported February 23, and the next Pending Home Sales Index will be February 29; release times are 10:00 a.m. ET.

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Pending Sales Inch Forward in December


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Existing-Home Sales Surge in December


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December 2015 Existing-Home Sales


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Existing-Home Sales Surge Back in December

WASHINGTON (January 22, 2016) — Existing-home sales snapped back solidly in December as more buyers reached the market before the end of the year, and the delayed closings resulting from the rollout of the Know Before You Owe initiative pushed a portion of November’s would-be transactions into last month’s figure, according to the National Association of Realtors®. Led by the South and West, all four major regions saw large increases in December.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, ascended 14.7 percent to a seasonally adjusted annual rate of 5.46 million in December from 4.76 million in November. After last month’s turnaround (the largest monthly increase ever recorded), sales are now 7.7 percent above a year ago.

Lawrence Yun, NAR chief economist, says December’s robust bounce back caps off the best year of existing sales (5.26 million) since 2006 (6.48 million). “While the carryover of November’s delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,” he said. “Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year.”

The median existing-home price2 for all housing types in December was $224,100, up 7.6 percent from December 2014 ($208,200). Last month’s price increase marks the 46th consecutive month of year-over-year gains.

Total housing inventory3 at the end of December dropped 12.3 percent to 1.79 million existing homes available for sale, and is now 3.8 percent lower than a year ago (1.86 million). Unsold inventory is at a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 (3.6 months).

“Although some growth is expected, the housing market will struggle in 2016 to replicate last year’s 7 percent increase in sales,” adds Yun. “In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas.”

The percent share of first-time buyers was at 32 percent in December (matching the highest share since August), up from 30 percent in November and 29 percent a year ago. First-time buyers in all of 2015 represented an average of 30 percent, up from 29 percent in both 2014 and 2013. A separate NAR survey released in late 20154 revealed that the annual share of first-time buyers was at its lowest level in nearly three decades.

“First-time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,” says Yun. “While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters’ overwhelming interest to own a home5 should lead to a modest uptick in first-time buyer activity in 2016.”

All-cash sales were 24 percent of transactions in December (27 percent in November) and are down from 26 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in December, down from both 16 percent in November and 17 percent a year ago. Sixty-four percent of investors paid cash in December.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage stayed below 4 percent for the fifth consecutive month but increased in December to 3.96 from 3.94 percent in November. The average commitment rate for all of 2015 was 3.85 percent.

Properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below the 66 days in December 2014. Short sales were on the market the longest at a median of 86 days in December, while foreclosures sold in 68 days and non-distressed homes took 57 days. Thirty-two percent of homes sold in December were on the market for less than a month.

“December’s rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off,” says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “However, our data is still showing longer closing timeframes, which is a reminder that the near-term challenges we anticipated are still prevalent. NAR advised members to extend the time horizon on their purchase contracts to address this concern, and we’ll continue to work with our industry partners to ensure 2016 is a success for consumers, homeowners and Realtors® alike.”

Distressed sales6 – foreclosures and short sales – declined to 8 percent in December, down from 9 percent in November and 11 percent a year ago. Six percent of December sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in December (15 percent in November), while short sales were discounted 15 percent (unchanged from November).

Single-family and Condo/Co-op Sales

Single-family home sales jumped 16.1 percent to a seasonally adjusted annual rate of 4.82 million in December from 4.15 million in November, and are now 7.1 percent higher than the 4.50 million pace a year ago. The median existing single-family home price was $226,000 in December, up 8.0 percent from December 2014.

Existing condominium and co-op sales increased 4.9 percent to a seasonally adjusted annual rate of 640,000 units in December from 610,000 in November, and are now 12.3 percent above December 2014 (570,000 units). The median existing condo price was $209,900 in December, which is 4.9 percent above a year ago.

December existing-home sales in the Northeast increased 8.7 percent to an annual rate of 750,000, and are now 11.9 percent above a year ago. The median price in the Northeast was $255,700, which is 5.3 percent above December 2014.

In the Midwest, existing-home sales jumped 10.9 percent to an annual rate of 1.22 million in December, and are now 9.9 percent above December 2014. The median price in the Midwest was $171,000, up 7.5 percent from a year ago.

Existing-home sales in the South leaped 14.6 percent to an annual rate of 2.27 million in December, and are now 4.6 percent above December 2014. The median price in the South was $196,100, up 6.8 percent from a year ago.

Existing-home sales in the West catapulted 23.2 percent to an annual rate of 1.22 million in December, and are now 8.9 percent higher than a year ago. The median price in the West was $321,100, which is 8.2 percent above December 2014.

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NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ 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 account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

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.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to 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 composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

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 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

5According to NAR’s inaugural Housing Opportunities and Market Experience (HOME) survey (released last month), 94 percent of current renters 34 years of age or younger want to own a home in the future.

6Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: NAR’s Pending Home Sales Index for December will be released January 28, and Existing-Home Sales for January will be released February 23; release times are 10:00 a.m. ET.

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Martin Luther King, Jr. Day


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Housing Expectations for 2016


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Housing Expectations for 2016


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NAR Forecast: Modest Increase in Home Sales Expected in 2016


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2016 Forecast: Modest Increase in Home Sales Expected


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NAR Forecast: Modest Increase in Home Sales Expected in 2016


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December 2015 Foot Traffic


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Pending Home Sales Decline Modestly in November

WASHINGTON (December 30, 2015) — Pending home sales in November slightly declined for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale, according to the National Association of Realtors®. Modest gains in the Midwest and South were offset by larger declines in the Northeast and West.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, decreased 0.9 percent to 106.9 in November from an upwardly revised 107.9 in October but is still 2.7 percent above November 2014 (104.1). Although the index has increased year-over-year for 15 consecutive months, last month’s annual gain was the smallest since October 2014 (2.6 percent).

Lawrence Yun, NAR chief economist, says November’s dip in contract activity continues the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May1. “Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains,” he said. “While feedback from Realtors® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.”

According to Yun, with existing housing inventory already below year ago levels2 and new home construction still deficient, it’s likely supply constraints and faster price appreciation will reappear once the spring buying season begins.

“Especially with mortgage rates likely on the rise, affordability issues could creep up enough to temper sales growth – especially to first-time buyers in higher priced markets,” adds Yun.

Existing-home sales are forecast to finish 2015 at a pace of around 5.25 million – the highest since 2006, but roughly 25 percent below the prior peak set in 2005 (7.08 million). The national median existing-home price for all of this year will be close to $220,700, up around 6.0 percent from a year ago.

On Tuesday, January 12, NAR will release a 2016 housing outlook forecast video, infographic and news release.

The PHSI in the Northeast decreased 3.0 percent to 91.8 in November, but is still 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent to 104.9 in November, and is now 4.1 percent above November 2014.

Pending home sales in the South increased 1.3 percent to an index of 119.9 in November and are 0.5 percent higher than last November. The index in the West declined 5.5 percent in November to 100.4, but remains 4.5 percent above a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1The Pending Home Sales Index in May was at 112.3, the highest since April 2006 (113.7).

2Total housing inventory at the end of November decreased 3.3 percent to 2.04 million existing homes available for sale, which is 1.9 percent lower than a year ago (2.08 million).

*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 parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: Existing-Home Sales for December will be released January 22, and the next Pending Home Sales Index will be January 28; release times are 10:00 a.m. ET.

Article source: http://feedproxy.google.com/~r/RealtororgResearchHeadlines/~3/xScqJkehhQs/pending-home-sales-decline-modestly-in-november

Pending Home Sales Ease in November


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Existing-Home Sales Drop Sharply in November


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Existing-Home Sales Suffer Setback in November, Fall to Slowest Pace Since April 2014

WASHINGTON (December 22, 2015) — Existing-home sales dropped off considerably in November to the slowest pace in 19 months, but some of the decrease was likely because of an apparent rise in closing timeframes that may have pushed some transactions into December, according to the National Association of Realtors®. All four major regions saw sales declines in November.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 10.5 percent to a seasonally adjusted annual rate of 4.76 million in November (lowest since April 2014 at 4.75 million) from a downwardly revised 5.32 million in October. After last month’s decline (largest since July 2010 at 22.5 percent), sales are now 3.8 percent below a year ago — the first year-over-year decrease since September 2014.

Lawrence Yun, NAR chief economist, says multiple factors led to November’s sales decline, but the primary reason could be an anomaly as the industry adjusts to the new Know Before You Owe rule. “Sparse inventory and affordability issues continue to impede a large pool of buyers’ ability to buy, which is holding back sales,” he said. “However, signed contracts have remained mostly steady in recent months, and properties sold faster in November. Therefore it’s highly possible the stark sales decline wasn’t because of sudden, withering demand.”

According to Yun, although Realtors® are adjusting accordingly to the Know Before You Owe initiative, the main takeaway so far has been the need for longer closing times. According to NAR’s Realtors® Confidence Index, 47 percent of respondents in November reported that they are experiencing a longer time to close compared to a year ago, up from 37 percent in October.

“It’s possible the longer timeframes pushed a latter portion of would-be November transactions into December,” says Yun. “As long as closing timeframes don’t rise even further, it’s likely more sales will register to this month’s total, and November’s large dip will be more of an outlier.”

The median existing-home price2 for all housing types in November was $220,300, which is 6.3 percent above November 2014 ($207,200). November’s price increase marks the 45th consecutive month of year-over-year gains.

Total housing inventory3 at the end of November decreased 3.3 percent to 2.04 million existing homes available for sale, and is now 1.9 percent lower than a year ago (2.08 million). Unsold inventory is at a 5.1-month supply at the current sales pace, up from 4.8 months in October.

“Realtors® worked hard to prepare for Know Before You Owe, and we knew there would be some near-term challenges as the industry continues to adapt,” says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “Nonetheless, an early trend of longer lead times to closings is cause for concern. As Realtors® report issues with their transactions, we will continue to work with the Consumer Financial Protection Bureau to ensure as little disruption as possible to the business of real estate.”

Properties typically stayed on the market for 54 days in November, a decrease from 57 days in October and below the 65 days in November 2014. Short sales were on the market the longest at a median of 91 days in November, while foreclosures sold in 47 days and non-distressed homes took 54 days. Thirty-seven percent of homes sold in November were on the market for less than a month.

The percent share of first-time buyers was at 30 percent in November, down from 31 percent both in October and a year ago. Despite first-time buyers’ continued absence from the market, NAR’s inaugural quarterly Housing Opportunities and Market Experience survey — released earlier this month — found that an overwhelming majority of current renters who are 34 years of age or younger want to own a home in the future (94 percent). The top reason given by renters for not currently owning was the inability to afford to buy.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage hovered below 4 percent for the fourth consecutive month but increased in November to 3.94 from 3.80 percent in October. A year ago, the average commitment rate was 4.00 percent.

“The Federal Reserve’s decision this month to raise short-term rates is the first of many increases over the next couple of years,” says Yun. “Although this first move will likely have minimal impact on mortgage rates, additional hikes will push borrowing costs to around 4.50 percent by the end of next year. With home prices expected to continue rising, wages and new home construction need to start increasing substantially to preserve affordability.”

Matching the highest share since January, all-cash sales rose to 27 percent of transactions in November (24 percent in October) and are also up from 25 percent a year ago. Individual investors, who account for many cash sales, purchased 16 percent of homes in November (also the highest since January), up both from 13 percent in October and 15 percent a year ago. Sixty-four percent of investors paid cash in November.

Distressed sales4 — foreclosures and short sales — climbed to 9 percent in November, up from 6 percent in October but unchanged from a year ago. Seven percent of November sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in November (18 percent in October), while short sales were discounted 15 percent (8 percent in October).

Single-family and Condo/Co-op Sales

Single-family home sales dropped 12.1 percent to a seasonally adjusted annual rate of 4.15 million in November from 4.72 million in October, and are now 4.6 percent lower than the 4.35 million pace a year ago. The median existing single-family home price was $221,600 in November, up 6.6 percent from November 2014.

Existing condominium and co-op sales increased 1.7 percent to a seasonally adjusted annual rate of 610,000 units in November from 600,000 in October, and are now 1.7 percent above November 2014 (600,000 units). The median existing condo price was $211,400 in November, which is 4.7 percent above a year ago.

Regional Breakdown

November existing-home sales in the Northeast declined 9.2 percent to an annual rate of 690,000, but are still 1.5 percent above a year ago. The median price in the Northeast was $254,800, which is 3.2 percent above November 2014.

In the Midwest, existing-home sales descended 15.4 percent to an annual rate of 1.10 million in November, and are now 2.7 percent below November 2014. The median price in the Midwest was $169,300, up 5.3 percent from a year ago.

Existing-home sales in the South decreased 6.2 percent to an annual rate of 1.98 million in November, and are now 5.7 percent below November 2014. The median price in the South was $189,400, up 6.3 percent from a year ago.

Existing-home sales in the West dropped 13.9 percent to an annual rate of 990,000 in November, and are now 4.8 percent lower than a year ago. The median price in the West was $319,700, which is 8.3 percent above November 2014.

# # #

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ 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 account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.

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.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to 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 composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

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 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: NAR’s Pending Home Sales Index for November will be released December 30, and Existing-Home Sales for December will be released January 22; release times are 10:00 a.m. ET.

Article source: http://feedproxy.google.com/~r/RealtororgResearchHeadlines/~3/AfDLWeemy_M/existing-home-sales-suffer-setback-in-november-fall-to-slowest-pace-since-april-2014

November 2015 Existing-Home Sales


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Quiz: Home Buyer Types


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September 2015 Foot Traffic


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October 2015 Foot Traffic


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November 2015 Foot Traffic


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NAR HOME Survey: Desire to Buy Strong Despite Affordability, Economic Concerns

WASHINGTON (December 17, 2015) — Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home, and a convincing majority still view homeownership as part of their American Dream, according to a new quarterly consumer survey released today by the National Association of Realtors®. Additionally, a newly-introduced index tracking the financial outlook of households found that compared to earlier this year an increasing share believes their personal financial situation will improve in the months ahead.

NAR’s inaugural quarterly household survey, Housing Opportunities and Market Experience (HOME), tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home, and expectations and experiences in the mortgage market1. New questions may be added to the survey each quarter to reflect timely topics impacting real estate.

The HOME survey data reveals that an overwhelming majority of current renters who are 34 years of age or younger want to own a home in the future (94 percent). Overall, 83 percent of polled renters have a desire to own, and 77 percent believe homeownership is part of their American Dream.

Lawrence Yun, NAR chief economist, says the survey’s findings debunk the notion that young adults aren’t interested in buying a home. “Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” he said. “Furthermore, there appears to be sizeable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households.”

The top two reasons given by renters for not currently owning was the inability to afford to buy (53 percent) and needing the flexibility of renting rather than owning (19 percent). When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring (33 percent) and an improvement in their financial situation (26 percent).

“A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first-time buyers than the idea that buying a home is not as desirable as it used to be,” adds Yun.

Households lukewarm about the ​​U.S. economy

Among all households (renters and homeowners) in the survey, the results highlight a split between those who agree the U.S. economy is on the right track and those who disagree. Only half of respondents believe the economy is currently improving, and 44 percent think the economy is actually in a recession.

Renters were only slightly more optimistic about current economic conditions, with 57 percent believing the economy is improving. Regardless of their confidence in the U.S. economy today, over three-quarters (76 percent) of those who don’t think the economy is improving still want to eventually buy a home.

“The promising stretch of job creation in several parts of the country in recent years has the housing market in 2015 on track for its best year of sales since the downturn,” says Yun. “However, that only half of surveyed households believe the economy is improving can be attributed to the fact that some areas have been slow to recover and wages have yet to grow in a meaningful way for far too many families.”

Adds Yun, “With roughly 26 million more people in the U.S.2 compared to the peak year of home sales in 2005 (7.08 million), the pace of existing sales would likely be more robust if not for the economy’s subpar growth since the downturn and wage gains that have failed to keep pace with rents and home prices.” 

Homeownership remains good financi​al decision, part of American Dream

Despite uncertainty about the economy’s current performance, at least 84 percent of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately, 76 percent who believe it’s a good decision feel strongly about it.

Additionally, at least 85 percent of surveyed households in each age category as well as across all education levels believe homeownership is part of their personal American Dream. The most appealing aspects of homeownership cited by those with this feeling include a place to raise a family (36 percent), owning their own place (26 percent) and a nest egg for retirement (14 percent).

Good time to buy, but skep​tical about ability to obtain a mortgage

NAR’s survey found that more homeowners (82 percent) than renters (68 percent) during the polling period believe that it’s a good time to buy a home. Furthermore, of those who thought it was a good time to buy, 64 percent felt strongly about buying. Among current owners, 61 percent believe it is a good time to sell a home, of which 53 percent felt strongly that it was a good time to sell.

According to the survey, roughly two-thirds (65 percent) think it would be very or somewhat difficult to obtain a mortgage. Furthermore, there are differences among income brackets. Renter households making between $30,000 and $40,000 were the most likely to be declined a mortgage (10 percent), while 51 percent of those who make more than $50,000 a year have not tried but feel confident they would succeed in getting a mortgage. Overall, five percent of renters have recently tried and failed to obtain financing for a home.

By nearly double the amount of other responses, the most common reason homeowners purchased a home was for lifestyle changes such as getting married, starting a family or retiring (35 percent). Eighteen percent said the desire to settle down in one location influenced their decision to buy, and 15 percent cited an improvement in their financial situation.

Direction of home prices, financial outlook on the rise

Reflecting the ongoing recovery of home values throughout most of the country, 89 percent of respondents said home prices in their communities have either risen or stayed the same in the past year. Looking ahead toward the next six months, 91 percent of respondents believe home prices in their community will increase or stay the same.

The HOME survey also calculates a monthly Personal Financial Outlook Index3 measured by household type, age, income and type of location. Since tracking began in March, the index representing all households has slowly trended upward to its highest current reading in December – reflecting stronger confidence that respondents’ financial situation will be better in six months. Currently, renters, younger households and those living in urban areas are more optimistic about their future financial situation.

“Young adults, who make up the majority of all renter households, are typically more optimistic about their future,” adds Yun. “As more of them settle down and begin plans to start a family, the allure of owning their own home as well as the long-term financial stability homeownership provides will drive their emergence into the housing market. However, the extent to how fast this occurs will greatly depend on more entry-level housing supply coming onto the market and needed improvements in affordability conditions.”  

About NAR’s HOME survey

In March through early December 2015, a sample of U.S. households was surveyed via random-digit dial, including half via cell phones and the other half via land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 9,034 household responses are represented.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1NAR Research’s HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace. The next release is scheduled for Tuesday, March 15, 2016 at 10:00 a.m. ET.

2According to U.S. population projections from the U.S. Census Bureau.

3Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 months.

Some statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab. Follow NAR Media’s Newsline blog at narnewsline.blogs.realtor.org and Twitter @NARMedia.

Article source: http://feedproxy.google.com/~r/RealtororgResearchHeadlines/~3/ef8e2DohUBE/nar-home-survey-desire-to-buy-strong-despite-affordability-economic-concerns

HOME Survey 2015


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Housing Opportunities and Market Experience Survey


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Quiz: Home Remodeling Projects


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Homeowners Reap Remodeling Benefits Whether Selling or Staying, Say Realtors®

WASHINGTON (December 9, 2015) — Homeowners preparing to sell often make improvements, both big and small, to their homes that can help yield positive results and garner top dollar from buyers. According to a new report from the National Association of Realtors®, remodeling projects can also bring major benefits to homeowners who choose to remain in their homes.

“Realtors® know that certain home upgrades and remodels can be beneficial to get more buyer eyes on a property, potentially bring in more offers or gain more equity from a home,” said NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “But remodeling projects are just as valuable to homeowners who simply want to get more joy out of their dwellings. Regardless of the situation, Realtors® know what remodeling projects bring the biggest bang for the buck and what projects are most likely to improve a homeowner’s impression of their current place.”

According to NAR’s 2015 Remodeling Impact Report, which uncovers the reasons homeowners choose a remodel and the increased happiness certain projects bring once completed, 64 percent have experienced increased enjoyment in their home after completing a remodeling project. Additionally, 75 percent of respondents said they felt a major sense of accomplishment when thinking of their completed project. Fifty-four percent of respondents felt happy about the changes to their home, and 40 percent felt satisfied. As for their reasons to complete a remodeling project, 38 percent of homeowners said they wanted to upgrade worn-out surfaces, finishes and materials; 17 percent wanted to add features and improve livability; and 13 percent believed it was time for a change.

Realtors® named kitchen upgrades, complete kitchen renovations, bathroom renovations and new wood flooring as the interior projects that most appeal to potential buyers. Similarly, Realtors® also ranked projects based on expected value at resale (without accounting for project price); the projects that ranked the highest in this category were complete kitchen renovations, kitchen upgrades, bathroom renovations and the addition of a bathroom.

When looking at the interior projects that yield the biggest financial results upon resale, Realtors® ranked hardwood flooring refinishes (100 percent of project cost recovered upon resale), insulation upgrades (95 percent recovered), new wood flooring (91 percent recovered), and converting a basement to a living area (69 percent recovered) as projects to consider.

Exterior projects are also important for both sellers and homeowners looking to increase satisfaction with their current home. Realtors® said new roofing, new vinyl windows, new garage doors and new vinyl siding are most appealing to potential buyers and are highly valued upon resale (both considering project price and disregarding project price). Upon resale, Realtors® said new roofing would recover 105 percent of its project cost, a new garage door would recover 87 percent, new vinyl siding would recover 83 percent, and new vinyl windows would bring back 80 percent of their cost. As for exterior projects that bring the most happiness for those not necessarily intending to sell, homeowners said new fiber-cement siding, new fiberglass or steel front doors, new roofing, and new garage doors brought the most satisfaction.

The 2015 Remodeling Impact Report, the first of its kind from NAR that examines personal satisfaction from remodeling projects, surveyed Realtors®, consumers who have completed their own remodeling projects, and members of the National Association of the Remodeling Industry.

“Remodeling projects can greatly improve both the value of and satisfaction with one’s home, which are great things no matter the reason for a project,” said Judy Mozen, president of the National Association of the Remodeling Industry. “This report highlights the best projects to consider in either situation and showcases just how much of a difference a good and professional remodel can make in real numbers.”

Salomone said the report not only assists homeowners who are preparing to sell in choosing the best projects to attract buyers, but it also helps those looking to get more personal satisfaction out of their homes. “Realtors® know that remodeling projects aren’t just done to get more money for a home once it’s time to sell – a home is your sanctuary, the place you raise your family and where you make lifelong memories, which is why the report can also help consumers decide which projects could enhance their current quality of life and happiness,” he said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

The National Association of the Remodeling Industry is the medium for business development, a platform for advocacy and the principal source for industry intelligence. NARI connects homeowners with its professional members and provides tips and tricks so that the consumer has a positive remodeling experience.

###

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Pending Home Sales Nudge Forward in October

WASHINGTON (November 30, 2015) — Pending home sales were mostly unchanged in October, but shifted marginally higher after two straight months of declines, according to the National Association of Realtors®. Gains in the Northeast and West were offset by declines in the Midwest and South.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, inched 0.2 percent to 107.7 in October from an upwardly revised 107.5 in September and is now 3.9 percent above October 2014 (103.7). The index has increased year-over-year for 14 consecutive months.

Lawrence Yun, NAR chief economist, says pending sales have plateaued this fall as buyers struggle to overcome a scant number of available homes for sale and prices that are rising too fast in some markets. “Contract signings in October made the most strides in the Northeast, which hasn’t seen much of the drastic price appreciation1 and supply constraints that are occurring in other parts of the country,” he said. “In the most competitive metro areas – particularly those in the South and West – affordability concerns remain heightened as low inventory continues to drive up prices.”   

According to Yun, although contract activity has slightly trended downward since the spring, the ongoing strengthening of several local job markets continues to fuel the improved demand for buying that has now pushed existing-sales above a 5 million sales pace for eight consecutive months.

“Areas that are heavily reliant on oil-related jobs are the exception and have already started to see some softness in sales because of declining energy prices,” adds Yun.

Yun presented his 2016 economic outlook and housing forecast earlier this month at the 2015 REALTORS® Conference Expo in San Diego. With demand expected to remain stable through the final two months of the year, he forecasts existing-home sales to finish 2015 at a pace of 5.30 million – the highest since 2006.

Although further expansion in existing-sales is expected next year, ongoing inventory shortages and affordability pressures from rising prices and mortgage rates will likely temper sales growth to around 3 percent (5.45 million) in 2016. Home prices are expected to slightly moderate from a 6 percent increase in 2015 to 5 percent next year.

“Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home,” says Yun.

The PHSI in the Northeast rose 4.5 percent to 93.6 in October, and is now 6.8 percent above a year ago. In the Midwest the index declined 1.0 percent to 103.9 in October, but remains 3.3 percent above October 2014. 

Pending home sales in the South decreased 1.7 percent to an index of 118.1 in October and are now 0.3 percent below last October. The index in the West climbed 1.7 percent in October to 106.2, and is 10.4 percent above a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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1The median home price in the Northeast in October was $248,900, up only 1.3 percent from a year ago. The other three major regions had price gains higher than 5 percent.

*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 parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

NOTE: NAR’s new quarterly Homeownership Opportunities and Market Experience (HOME) Survey will be released December 16, Existing-Home Sales for November will be released December 22, and the next Pending Home Sales Index will be December 30; release times are 10:00 a.m. EST.

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Moderate Expansion, Easing Prices Expected for Commercial Real Estate Markets

WASHINGTON (November 24, 2015) — Sustained job growth throughout the country and improving credit conditions are forecast to help keep commercial real estate activity expanding into next year, but property prices are likely to slightly cool off after reaching their peak in some major markets, according to the National Association of Realtors® quarterly commercial real estate forecast.

National office vacancy rates are forecast by Realtors® to decrease 0.8 percent to 14.8 percent over the coming year as continued job creation drives demand. The vacancy rate for industrial space is expected to decline 1.4 percent to 9.7 percent, and retail availability to decrease 1.3 percent to 11.3 percent. With new apartment construction projects coming through the pipeline in several markets, only multifamily vacancies are forecast to increase over the next year, from 6.1 percent to 7.3 percent.

Lawrence Yun, NAR chief economist, says the outlook for the commercial real estate sector continues to look bright despite the multiple headwinds that have held back the economy in recent months. “Temporary turbulence in the financial markets, a stronger U.S. dollar hurting exports and economic weakness overseas chipped away at third quarter growth and led to some deceleration in the pace of commercial investments,” he said. “The good news is that these deterrents are slowly residing, which should ultimately reawaken the growing appetite for commercial space heading into next year.”

According to Yun, increases in lending and investment activity will be driven by steady job creation and slightly easier access to credit. While healthier local labor markets are expected to slowly pull down vacancy rates while pushing rents higher, the modest opening of the credit box is an especially important development for Realtors®, who are mostly engaged in deals of $1 million or less and have clients that rely heavily on financing from local community banks and credit unions. Although most Realtor® who practice commercial are still reporting tight lending conditions, an increasing share are saying that credit is becoming slightly easier to obtain.

Regionally, several states in the South and West have outperformed the rest of the country in job growth over the past year. Led by strong demand for apartments from faster household formation and rent growth, metro areas in those states are expected to see elevated levels of new construction, which will lead to a slight uptick in vacancy rates.

“The best days for multifamily housing could be winding down as new construction has already surpassed historical averages,” adds Yun. “This sector has been the industry’s top performer over the past several years as a result of younger households struggling to become homeowners and the demand for apartments far exceeding supply in many markets.”

Even though rising occupancy and rents will continue, property prices are forecast to decline slightly in 2016 as the Federal Reserve starts to raise interest rates. With cap rates already compressed to very low levels, Yun anticipates short-term rate increases in December, and then again in March, which could slightly temper market growth. However, investments are still expected to continue on an upward trend.

“Rising sales and investor optimism in recent years has pushed prices past their peak in many of the larger commercial markets,” says Yun. “Investors – especially those abroad – looking for better yields will likely seek to invest their larger sums of cash in smaller markets and into lower-end properties.”

The latest Realtors® Commercial Real Estate Market Survey, which measures quarterly activity from NAR’s commercial members, found that similar to residential real estate, the shortage of available inventory remains a concern and is pushing price growth upward. During the third quarter, Realtors®’ sales volume rose 7.2 percent year-over-year and prices increased 3.8 percent.

NAR’s latest Commercial Real Estate Outlook1 offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets.

The NAR commercial community includes commercial members; commercial real estate boards; commercial committees, subcommittees and forums; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.

Approximately 70,000 NAR members specialize in commercial real estate brokerage and related services including property management, counseling and appraisal. In addition, more than 200,000 members are involved in commercial transactions as a secondary business.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1Additional analysis will be posted under Economists’ Outlook in the Research blog section of Realtor.org in coming days at: http://economistsoutlook.blogs.realtor.org/.

The next commercial real estate forecast and quarterly market report will be released February 25 at 10:00 a.m. ET.

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Existing-Home Sales Dial Back in October

WASHINGTON (November 23, 2015) — With mortgage rates remaining below 4 percent for the third straight month, existing-home sales in October were at a healthy pace but failed to keep up with September’s jump, according to the National Association of Realtors®. All four major regions saw no gains in sales in October.

Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.4 percent to a seasonally adjusted annual rate of 5.36 million in October from 5.55 million in September. Despite last month’s decline, sales are still 3.9 percent above a year ago (5.16 million).

Lawrence Yun, NAR chief economist, says a sales cooldown in October was likely given the pullback in contract signings the last couple of months. “New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets,” he said. “Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales.”

Adds Yun, “As long as solid job creation continues, a gradual easing of credit standards even with moderately higher mortgage rates should support steady demand and sales continuing to rise above a year ago.”

The median existing-home price2 for all housing types in October was $219,600, which is 5.8 percent above October 2014 ($207,500). October’s price increase marks the 44th consecutive month of year-over-year gains.

Total housing inventory3 at the end of October decreased 2.3 percent to 2.14 million existing homes available for sale, and is now 4.5 percent lower than a year ago (2.24 million). Unsold inventory is at a 4.8-month supply at the current sales pace, up from 4.7 months in September.

The percent share of first-time buyers increased to 31 percent in October, up from 29 percent both in September and a year ago. NAR’s annual Profile of Home Buyers and Sellers – released earlier this month4 – revealed that the annual share of first-time buyers fell to its second-lowest level since the survey began in 1981.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage stayed below 4 percent for the third consecutive month, declining in October to 3.80 from 3.89 percent in September. A year ago, the average commitment rate was 4.04 percent.

All-cash sales were 24 percent of transactions in October (unchanged from September) and are down from 27 percent a year ago. Individual investors, who account for many cash sales, purchased 13 percent of homes in October, unchanged from September but down from 15 percent a year ago. Sixty-two percent of investors paid cash in October.

Distressed sales5 – foreclosures and short sales – declined to 6 percent in October, which is the lowest since NAR began tracking in October 2008; they were 9 percent a year ago. Five percent of October sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in October (17 percent in September), while short sales were discounted 8 percent (19 percent in September).

“All-cash and investor sales are still somewhat elevated historically despite the diminishing number of distressed properties,” adds Yun. “With supply already meager at the lower-end of the price range, competition from these buyers only adds to the list of obstacles in the path for first-time buyers trying to reach the market.”

NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says Realtors® overwhelmingly applaud the Federal Housing Administration’s announced changes to begin simplifying some of its overly-restrictive condo certification procedures. “With first-time buyers held back in several markets, affordable FHA financing needs to be a viable option in helping them achieve homeownership,” he said. “The new changes to FHA’s condo policy, including improving owner-occupancy requirements, streamlining the recertification process, and addressing restrictions on eligible property insurance for condos will go a long way in improving the ability for these young households to purchase a condo.”

Properties typically stayed on the market for 57 days in October, an increase from 49 days in September but below the 63 days in October 2014. Short sales were on the market the longest at a median of 90 days in October, while foreclosures sold in 67 days and non-distressed homes took 57 days. One-third of homes sold in October were on the market for less than a month.

Single-family and Condo/Co-op Sales

Single-family home sales fell 3.7 percent to a seasonally adjusted annual rate of 4.75 million in October from 4.93 million in September, but are still 4.6 percent above the 4.54 million pace a year ago. The median existing single-family home price was $221,200 in October, up 6.3 percent from October 2014.

Existing condominium and co-op sales declined 1.6 percent to a seasonally adjusted annual rate of 610,000 units in October from 620,000 in September, and are now down 1.6 percent from October 2014 (620,000 units). The median existing condo price was $207,100 in October, which is 1.6 percent above a year ago.

Regional Breakdown

October existing-home sales in the Northeast were at an annual rate of 760,000, unchanged from September and 8.6 percent above a year ago. The median price in the Northeast was $248,900, which is 1.3 percent above October 2014.

In the Midwest, existing-home sales declined 0.8 percent to an annual rate of 1.30 million in October, but are 8.3 percent above October 2014. The median price in the Midwest was $172,300, up 5.7 percent from a year ago.

Existing-home sales in the South decreased 3.2 percent to an annual rate of 2.14 million in October, but are still 0.5 percent above October 2014. The median price in the South was $188,800, up 6.2 percent from a year ago.

Existing-home sales in the West fell 8.7 percent to an annual rate of 1.16 million in October, but are still 2.7 percent above a year ago. The median price in the West was $319,000, which is 8.0 percent above October 2014.

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NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ 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 account for more than 90 percent of total home sales, are based on a much larger data sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

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.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to 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 composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

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 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

5Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

NOTE: NAR’s Pending Home Sales Index for October will be released November 30, the new quarterly Homeownership Opportunities and Market Experience (HOME) Survey will be released December 16, and Existing-Home Sales for November will be released December 22; release times are 10:00 a.m. ET.

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Staying Attuned to Buyer Preferences Will Help Realtors® Maintain Competitive Advantage

SAN DIEGO (November 14, 2015) – The wave of new millennial homebuyers is just beginning, and Realtors® should prepare themselves now by adapting to buyers’ housing preferences, use of technology and demand for environmentally friendly features. That’s according to speakers at a buyer preferences forum organized by the REALTOR® University Richard J. Rosenthal Center for Real Estate Studies here at the 2015 REALTORS® Conference Expo.

NAR’s Jessica Lautz, managing director of survey research, and Chad Curry, managing director at the Center for REALTOR® Technology, were joined by Jonathan Smoke, chief economist for realtor.com®, to discuss buyer preferences, technologies and sustainable features that are becoming increasingly important to buyers – especially millennials.

Highlighting some of the key findings from NAR’s just-released 2015 Profile of Home Buyers and Sellers, Lautz identified some of the myths about homebuying activity in recent years. These include millennials not having any interest in buying a home, households leaving the suburbs in droves, and baby boomers selling their homes and downsizing to Florida.

“Despite millennials’ overall share being depressed mostly for economic reasons, the allure of homeownership remains strong among a group that’s represented the largest generation of buyers for three straight years,” said Lautz. “Our data show that contrary to some of the stereotypes out there, over 80 percent of buyers in every generation are purchasing single-family homes and most of them are in the suburbs.”

“The exception is recent buyers from the Silent Generation, who purchased condos at double the amount of millennials,” she added.

Smoke agreed with Lautz and said the housing market is at the leading edge of millennials buying homes. “Historically, the 25-34 year range always represents the largest buying cohort and today, that range is the older half of current millennials,” he said. “According to realtor.com® traffic, we’re seeing increasing interest from this group. They’re upbeat about homeownership, but are hampered by credit qualification and saving for a down payment.”

According to Smoke, millennials are far less likely to buy newly constructed homes. While part of the reason is because much of the new supply coming onto the market is at higher price points, he said millennial buyers appear to have a decided preference for existing homes. Of the qualities that are most important to them, neighborhood safety and quality of construction top the list.

On the topic of searching for a home, Lautz added that although almost half of all buyers begin their home search by looking at listings online, real estate solidly remains a business based on relationships. She said this is no surprise considering that even with the popularity and accessibility of searching for homes online, finding the right home was ranked the highest among all generations as the most difficult step in home buying.

“Face-to-face interaction and guidance through each step of the home buying or selling process is highly sought,” said Lautz. “This is why agent-assisted sales are currently at an all-time high.”

With most new home construction right now being targeted towards wealthier buyers, Curry discussed ways homeowners can modernize their existing homes with smart, energy-efficient technology to attract younger buyers.

“Smart home gadgets and environmentally friendly features are becoming increasingly important to buyers and should be used as selling points by Realtors® on a listing,” said Curry. “Furthermore, if a recently purchased home lacks these features, they make an excellent closing gift.”

Curry said Realtors® and homeowners should think of a house as made up of cells, with smart gadgets playing the role of nuclei with all of the important information about how your home is performing. When a house goes on the market, having information on humidity levels and carbon dioxide ensures that the home is in top shape for potential buyers.

The panel all agreed that while the demand for green features and tech gadgets varies by region, household type and age, their popularity will only continue to rise. Having knowledge of these features and using them to market a listing will help Realtors® keep their competitive advantage and connect buyers with sellers.

“At the end of the day, the order of housing preferences comes down to where a buyer is in their life,” added Lautz. “Commuting costs are much more important to younger buyers and decreases as they get older and raise kids. When that time arrives, a bigger home with a yard in a nice school district is likely more important.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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Commercial Real Estate May Peak in Expensive Markets, says Realtors® Chief Economist

WASHINGTON (November 13, 2015) — While commercial real estate has been steadily recovering in recent years, industry experts expressed concern that prices may have reached a peak during the Commercial Economic Issues and Trends Forum at the 2015 REALTORS® Conference Expo.

Lawrence Yun, NAR chief economist, said the fundamentals of the commercial real estate market have been gradually improving and this has led to prices rising to new peaks.

“There is an indication that prices may have topped for high-end commercial properties in major markets,” said Yun. “Those properties priced above $2.5 million have enjoyed large price gains in recent years but are now at risk of experiencing a modest price decline.”

Yun predicts that while the larger commercial markets have seen significant growth over the last few years, now is the time for smaller markets and lower end properties to shine. This is positive news for Realtors® who specialize in commercial real estate and who tend to work with smaller properties typically valued between $500,000 and $1 million.

“Lower end properties were slower to recover, but a slight easing in lending conditions combined with job gains are leading to increased leasing and investment activity,” said Yun.

Yun also anticipates that states in the western and southern parts of the U.S. will outperform the rest of the country in the leasing of all commercial properties. The areas’ steady job growth should boost leasing in the retail, office, industrial and multi-family markets.

Jim Costello, senior vice president with Real Capital Analytics, joined Yun on stage during the forum. Costello touched on growing fears of a potential bubble; fears he understands but believes are unfounded.

“Yes, the prices for commercial real estate are high, but they are high in a much more conservative lending environment,” said Costello. “Back in 2006 and 2007 we saw deals being made that had no room for error, and today we have a lot more room for error. As long as current owners can continue to finance their assets and are not forced to sell, the worst we could see is the market stall.”

Predictions of rising interest rates from the Federal Reserve, however, have some experts concerned about a potential price decline in the commercial sector. “Will there be a rate hike in December?” asked Yun. “Most likely. And there will probably be another one in March and then another run in August. We are likely going to see several rounds of rate hikes for the next few years. We are in a rising interest rate environment, which will then compete against rental yield return on commercial real estate properties and thereby negatively impact prices.”

The forecast for 2016 commercial market calculates that vacancy rates will shrink, as reported by Realtor® members. In 2015, office vacancy rates were at 15.6 percent, and they are predicted to shrink to 15 percent in 2016. The industrial market had a vacancy rate of 11.7 percent in 2015, which is forecasted to fall to 8.8 percent while retail should see a drop from 13.2 percent to 12 percent. Multifamily is the only market that is not predicted to see a decrease in vacancy but will remain constant at 7.1 percent. NAR predicts that the NCREIF Indices will fall from 249.8 to 249.0, while the Green St. Advisors will decrease from 117.5 to 115.5.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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Home Prices Sustain Steady Growth in Most Metro Areas in Third Quarter

WASHINGTON (November 12, 2015) — The encouraging lift–off in existing–home sales amidst ongoing inventory shortages kept home prices rising in most of the country during the third quarter, but overall price appreciation slowed to a healthier pace, according to the latest quarterly report by the National Association of Realtors®.

The median existing single–family home price increased in 87 percent of measured markets, with 154 out of 178 metropolitan statistical areas1 (MSAs) showing gains based on closings in the third quarter compared with the third quarter of 2014. Twenty–four areas (13 percent) recorded lower median prices from a year earlier.

There were slightly fewer rising markets in the third quarter compared to the second quarter, when price gains were recorded in 93 percent of metro areas. Twenty–one metro areas in the third quarter (12 percent) experienced double–digit increases, a decline from the 34 metro areas in the second quarter. Sixteen metro areas (9 percent) experienced double–digit increases in the third quarter of 2014.

Lawrence Yun, NAR chief economist, says there’s no question the housing market had its best quarter in nearly a decade. “The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” he said. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.”

The national median existing single–family home price in the third quarter was $229,000, up 5.5 percent from the third quarter of 2014 ($217,100). The median price during the second quarter of this year increased 8.2 percent from a year earlier.

Total existing–home sales2, including single family and condo, increased 3.4 percent to a seasonally adjusted annual rate of 5.48 million in the third quarter from 5.30 million in the second quarter, and are 8.3 percent higher than the 5.06 million pace during the third quarter of 2014.

Yun says sales had the potential to be even higher last quarter given the decline in mortgage rates and favorable economic conditions. “Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers — especially first–time buyers — are able to afford.”

The five most expensive housing markets in the third quarter were the San Jose, Calif., metro area, where the median existing single–family price was $965,000; San Francisco, $809,400; Anaheim–Santa Ana, Calif., $715,300; Honolulu, $714,000; and San Diego, $554,400.

The five lowest–cost metro areas in the third quarter were Cumberland, Md., where the median single–family home price was $82,400; Youngstown–Warren–Boardman, Ohio, $90,700; Decatur, Ill., $101,400; Rockford, Ill., $102,800; and Elmira, N.Y., $108,800.

“Many of the metro areas with the fastest price appreciation over the past year were in the South — particularly in Florida,” says Yun. “A combination of solid job gains, above average shares of vacation and foreign buyers and little new construction being added was behind these areas’ faster price growth.”

Metro area condominium and cooperative prices — covering changes in 62 metro areas — showed the national median existing–condo price was $215,200 in the third quarter, up 2.0 percent from the third quarter of 2014 ($211,000). Forty–four metro areas (71 percent) showed gains in their median condo price from a year ago; 18 areas had declines.

At the end of the third quarter, there were 2.21 million existing homes available for sale3, which is below the 2.28 million homes for sale at the end of the third quarter in 2014. The average supply during the third quarter was 4.9 months — down from 5.5 months a year ago.

NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says the overall pool of potential buyers still outweighs what’s available for sale in several markets this fall. “Realtors® are still reporting that many homes are going under contract more quickly than what’s typical this time of year,” he said. “While this is certainly beneficial to homeowners looking to sell, some are still reluctant to list out of concerns they’ll have limited time and choices during their own home search.”

Rising home prices, despite an increase in the national family median income ($67,723)4, slightly decreased affordability in the third quarter compared to the third quarter of last year. To purchase a single–family home at the national median price, a buyer making a 5 percent down payment would need an income of $50,324, a 10 percent down payment would require an income of $47,675, and $42,378 would be needed for a 20 percent down payment.

Regional Breakdown

Total existing–home sales in the Northeast jumped 6.4 percent in the third quarter and are 9.1 percent above the third quarter of 2014. The median existing single–family home price in the Northeast was $269,400 in the third quarter, up 3.5 percent from a year ago.

In the Midwest, existing–home sales rose 2.1 percent in the third quarter and are 9.0 percent higher than a year ago. The median existing single–family home price in the Midwest increased 4.8 percent to $181,100 in the third quarter from the same quarter a year ago.

Existing–home sales in the South climbed 3.0 percent in the third quarter and are 6.9 percent above the third quarter of 2014. The median existing single–family home price in the South was $200,700 in the third quarter, 6.0 percent above a year earlier.

In the West, existing–home sales increased 3.9 percent in the third quarter and are 9.7 percent above a year ago. The median existing single–family home price in the West increased 7.3 percent to $324,300 in the third quarter from the third quarter of 2014.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: NAR releases quarterly median single–family price data for approximately 170 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.

Data tables for MSA home prices (single family and condo) are posted at http://www.realtor.org/topics/metropolitan-median-area-prices-and-afford…. If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.

1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt.

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter–to–quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking of metropolitan area median single–family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high–cost metro areas, the national median condo price often is higher than the median single–family price. In a given market area, condos typically cost less than single–family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

2The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co–operative housing.

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

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 (prior to 1999, single–family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.0%.

NOTE: Existing–Home Sales for October will be released November 23, the fourth quarter Commercial Real Estate Report/Forecast will be released November 24, and the Pending Home Sales Index for October will be released November 30; release times are 10:00 a.m. EST.

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