TOM PLANT'S HOUSTON REAL ESTATE BLOG

Houston Association of REALTORS® will release statistics for August home sales late next week. July home sales declined 25% compared to July 2009. An early look at the August numbers indicates the Houston residential market will show another double digit decline when compared to August 2009. You should expect the number of homes sold to be 20% or more below sales in July 2009. I expect the decline will be less than 20%.

It appears the number of homes actively on the market will be near the same as last month. This is significant in that the number of homes actively for sale had been substantially increasing every month since November 2009. This is an encouraging sign. With lower demand, a continued increase in supple would be of concern.

These results are for the very large Houston market, the situation will vary significantly in each neighborhood. In the recent past, neighborhoods inside Loop 610 outperformed the larger Houston market. This was not the case in July nor is it the case in August. While the Houston market will show a decline of something less than 20%, the number of homes sold inside Loop 610 will show a decline near 30%.

In July sales of homes priced $1 million and more increased while the balance of the market declined. In August homes priced over $1 million will outperform the total market again. Sales of these homes will be very near the August 2009 level.

I will post more analysis and explain the implications when the official statistics are released. Whether buying or selling, it is a time to show caution. Now, more than ever, buyers and sellers need agents who are keenly attuned to the market and capable of providing sound, fact based advice. Contact me if you would like more detailed information. tom@tomplant.com or 713.942.6895.

Following a sharp drop in the months immediate after expiration of the home buyer tax credit, pending home sales have modestly risen, the NATIONAL ASSOCIATION OF REALTORS® says.

The Pending Home Sales Index, a forward-looking indicator, rose 5.2 percent to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1 percent below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

Yun added, “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”

The PHSI in the Northeast rose 6.3 percent to 62.5 in July but is 21.1 percent below a year ago. In the Midwest the index increased 4.1 percent to 66.7 but remains 25.7 percent below July 2009. Pending home sales in the South rose 1.2 percent to an index of 86.3, but are 15.6 percent lower than a year ago. In the West the index jumped 11.6 percent to 95.0 but is 17.6 percent below July 2009.

The national index had fallen 29.9 percent in May and another 2.8 percent in June.

Yun discusses the latest index figures in a 3-minute video.

Source: NAR

Copyright National Association of REALTORS®. Reprinted with permission.

 Yesterday I provided information showing in all of Houston, higher priced homes fared better in July than lower priced homes. That result was amplified inside Houston’s Loop 610.

It is important to recognize that homes in these close-in neighborhoods only represent approximately 5% of the total number of homes in the Houston market. Because of the higher average sales price, the same geographic area represents approximately 11% of Houston’s total dollar sales volume.

In July the number of homes sold priced under $1 million compared to July 2009 declined 32.5%. The number of homes sold priced over $1 million during the same period increased by 3 or 13.6%.

Here are the details by price range:

Based upon information from the Houston Association of Realtors® or its MLS for the period January 1,2009 to July 31, 2010. Current Listings as of August 31, 2010.

I reported to you the precipitous drop in Houston home sales before HAR issued its press release and before the news was carried on other news outlets. In that post I referred to Charles Dickens A Tale of Two Cities and used the analogy of a tale of two markets. The table shown below will illustrate one of the points I tried to make. While sales were down in all price ranges except the very high end, the decline in the upper price ranges was significantly less. While sales of homes priced under $250,000 dropped 28%, sales of homes priced over $1 million declined 13%. The effect inside the loop was even more pronounced. I will share those numbers with you soon. The number of current listings is as of August 31, 2010.

Based upon information from the Houston Association of Realtors® or its MLS for the period January 1,2009 to July 31, 2010.

Source:  

Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009. Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun added.

Mortgage Rates Dip
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.56 percent in July from 4.74 percent in June; the rate was 5.22 percent in July 2009. Last week, Freddie Mac reported the 30-year fixed was down to 4.42 percent.

The national median existing-home price for all housing types was $182,600 in July, up 0.7 percent from a year ago. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009.

“Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses,” Yun said. “Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”

Inventory Rises
Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June. Raw unsold inventory is still 12.9 percent below the record of 4.58 million in July 2008.

NAR President Vicki Cox Golder said there are great opportunities now for buyers who weren’t able to take advantage of the tax credit. “Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position,” she said.

A parallel NAR practitioner survey shows first-time buyers purchased 38 percent of homes in July, down from 43 percent in June. Investors accounted for 19 percent of sales in July, up from 13 percent in June; the balance were to repeat buyers. All-cash sales rose to 30 percent in July from 24 percent in June.

Breakdown of the Numbers
• Single-family home sales dropped 27.1 percent to a seasonally adjusted annual rate of 3.37 million in July from a pace of 4.62 million in June, and are 25.6 percent below the 4.53 million level in July 2009; they were the lowest since May 1995 when the sales rate was 3.34 million.
• The median existing single-family home price was $183,400 in July, which is 0.9 percent above a year ago.
• Single-family median existing-home prices were higher in 11 out of 19 metropolitan statistical areas reported in July in comparison with July 2009 (the price in one of 20 tracked markets was not available). However, existing single-family home sales fell in all 20 areas from a year ago.
• Existing condominium and co-op sales fell 28.1 percent to a seasonally adjusted annual rate of 460,000 in July from 640,000 in June, and are 24.0 percent below the 605,000-unit level in July 2009. The median existing condo price was $176,800 in July, down 1.7 percent from a year ago.

By Region
• Existing-home sales in the Northeast dropped 29.5 percent to an annual pace of 620,000 in July and are 30.3 percent lower than a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009.
• Existing-home sales in the Midwest fell 35.0 percent in July to a level of 800,000 and are 33.3 percent below July 2009. The median price in the Midwest was $151,600, down 2.8 percent from a year ago.
• In the South, existing-home sales dropped 22.6 percent to an annual pace of 1.54 million in July and are 19.8 percent below a year ago. The median price in the South was $156,300, down 3.3 percent from July 2009.
• Existing-home sales in the West fell 25.0 percent to an annual level of 870,000 in July and are 23.0 percent below a year ago. The median price in the West was $224,800, up 3.3 percent from July 2009.

Source: NAR                         Copyright National Association of REALTORS®. Reprinted with permission.

Earlier this week I reported that single family homes sales declined 25.1% in July compared to July 2009. In that report I stated: “It is unclear how much the tragedy of the oil spill in the gulf, the extreme heat Houston has experienced, and other factors may have influenced home buyers.” In this report in The Houston Business Journal, a study and poll conducted by Clear Capital finds a correlation between the drop in home sales and the BP oil spill in the Gulf of Mexico. The study is unable to determine how much of the decline is attributable to the oil spill. Read it and let me know what you think.

 HAR has released statistics for Houston home sales in July 2010. You read here a week ago to expect single family sales to be at least 20% lower than June 2009. The final result is 25% lower. Watch HAR Chair Margie Dorrance discuss July home sales. 

The statistics of July 2010 homes sales in Houston Texas inspire me to think of Charles Dickens: “It was the best of times, it was the worst of times…” The housing market is either about to enter a rough patch or July, with home sales off 25.1% compared to 2009, was an aberration in a year that has shown steady progress until now. In July sales of homes in all price ranges under $1 million were down substantially. However, Inside Loop 610, sales of homes priced over $1 million were up compared to 2009.

Here is the graph of results I provide for you monthly. Note that for the first time, Active Listings is higher than Pending Sales.

I believe we are in a period of instability and uncertainty. It is important to note that 2009 was a very atypical year and comparisons to specific months are not as meaningful as in previous years. July 2009 had the highest level of home sales of any month that year. On the other hand, the decline in July is meaningful. At the end of six months, homes sales were 9.4% ahead of last year. At the end of seven months, home sales are 3% ahead of last year. It is unclear how much the tragedy of the oil spill in the gulf, the extreme heat Houston has experienced, and other factors may have influenced home buyers.

I am advising both my Buyers and my Sellers to proceed cautiously. Buyers who work with me and follow my advice after I carefully evaluate market value may find this an opportune time to buy. Sellers who work with me to properly price their home and have some patience will find there are still people buying homes, even in a turbulent market. Thinking of Buying or Selling? Contact me to discuss what is happening in your neighborhood. tom@tomplant.com  713.942.6895.

Check My Blog  frequently for further updates. I will be posting information about specific price ranges soon.