2011 Marks Worst Year on Record for New-Home Sales

Sales of new-home declined in December, dropping 2.2 percent, and marking the end to the worst year on record for new-home sales, the Commerce Department reported Thursday.

New-home sales reached a seasonally adjusted annual pace of 307,000 in December — less than half the 700,000 pace that economists consider healthy for the sector.

In 2011, 302,000 new homes were sold nationwide, overtaking 2010’s 323,000 sales that had previously marked the worst year for sales on record.

The new-home sector continues to struggle to compete against discounted distressed properties that are plaguing many markets and have put downward pressure on home prices. Builders also say tighter lending standards are preventing some home buyers for qualifying for financing, and appraisals of new-homes are coming in lower on the agreed upon purchase price, causing more deals to fall through.

In December, the median sales price of a new-home was $210,300, according to the Commerce Department.

Turnaround Coming?

Despite the latest numbers from December, new-home sales rose in the overall final quarter of 2011. Home construction for single-family homes increased in the final three months of 2011, and an index measuring homebuilder sentiment showed builders are more positive about where the market is heading too.

“Although this [December] decline was unexpected, it does not change the story that housing has likely bottomed,” Jennifer H. Lee, senior economist at BMO Capital Markets, told the Associated Press.

Source: “New Home Sales 2011: Worst Year on Record,” Associated Press (Jan. 26, 2012)

Record Rates Push Housing Affordability Higher

DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 20, 2012

The 30-year fixed-rate mortgage hit another all-time low this week, marking the seventh straight week it has averaged below 4 percent, Freddie Mac reports in its weekly mortgage market survey.

Here’s a closer look at rates for the week ending Jan. 19:

• 30-year fixed-rate mortgages: averaged 3.88 percent, with an average 0.8 point, a new all-time low and dropping from last week’s previous record of 3.89 percent. A year ago at this time, 30-year rates averaged 4.74 percent.
• 15-year fixed-rate mortgages: averaged 3.17 percent, with an average 0.8 point, up slightly from last week’s record low of 3.16 percent. Last year at this time, 15-year rates averaged 4.05 percent.
• 5-year adjustable-rate mortgages: averaged 2.82 percent, with an average 0.7 point, the same as last week’s average. Last year at this time, 5-year ARMs averaged 3.69 percent.
• 1-year ARMs: averaged 2.74 percent, with an average 0.6 point, dropping from last week’s 2.76 percent average. Last year at this point, the 1-year ARM averaged 3.25 percent.

Source: Freddie Mac

December Existing-Home Sales Show Uptrend

Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above where they were a year ago, according to the National Association of REALTORS®.

The latest monthly data shows total existing-home salesrose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.

Affordability Conditions

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96 percent in December from 3.99 percent in November; the rate was 4.71 percent in December 2010; recordkeeping began in 1971.

NAR President Moe Veissisaid more buyers are expected to take advantage of market conditions this year. “The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”

Total housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November.