Despite Low Rates, Pending Home Sales Slip In August
Despite the lowest mortgage rates of all-time, home buyers are slowing the pace at which they’re buying homes.
According to the National Association of REALTORS®, on a seasonally-adjusted basis, the Pending Home Sales Index fell 1 percent in August.
The Pending Home Sales Index measures homes under contract, but not yet sold, nationwide. In this respect, the Pending Home Sales Index is a forward-looking housing market indicator; a predictor of future home sales.
It’s one of the few national indices that “looks ahead” to future market conditions. Most housing data, by contrast, describes past events.
On a regional basis, only the South Region showed improvement in August’s Pending Home Sales Index report :
- Northeast Region: -5.8%
- Midwest Region : -3.7%
- South Region : +2.6%
- West Region : -2.4%
That said, even the value of regional data can be questioned. Like all things in real estate, the number of homes going under contract will vary on the local level.
For example, in the Northeast Region where pending home sales slipped in August, there are close to a dozen states. Some of those states performed better than others, and there is no doubt that cities and towns exist in the region in which pending home sales actually climbed.
As a national/regional report, the Pending Home Sales Index cannot show local market data and, for that reason, it’s somewhat irrelevant to everyday buyers and sellers. If you’re in the market to buy or sell a home today, it’s your local housing market data that matters to you.
We watch the Pending Home Sales Index because it paints a broad picture of housing nationwide. To get local market conditions, though, you’ll want to talk with a local real estate professional.
Case-Shiller Index : 85% Of Tracked Cities Showed Home Price Improvement In July
Standard & Poors released its monthly Case-Shiller Index this week. The Case-Shiller Index measures home price changes from month-to-month, and year-to-year, in 20 select U.S. cities. It also reports a “national” index; a composite of the values in said cities.
The most recent Case-Shiller Index shows a 0.9% rise in home values from June to July 2011. Home values were higher in 17 of the 20 tracked cities. Only Phoenix and Las Vegas fell. Denver was flat.
Also noteworthy is that, of all of the Case-Shiller cities, Detroit posted the strongest 1-year, home price improvement. As compared to July 2010, home values are higher by 1.2 percent in Detroit. This bests even Washington, D.C. — long-believed to be the nation’s healthiest housing market.
That said, we should be careful of the conclusions we draw from July’s Case-Shiller Index — both on a city-wide level, and on a national level. This is because, as with most “home price trackers”, the Case-Shiller Index has flaws in its methodology.
The first Case-Shiller Index flaw is its limited scope. Although it’s purported to be a “nationa”l housing index, the data that comprises the monthly Case-Schiller Index is sourced from just 20 U.S. cities. These 20 cities represent just 0.6% of the more than 3,100 municipalities nationwide.
The second Case Shiller Index flaw is that the sample sets include single-family, detached homes only. iCondominiums, multi-unit homes, and new construction are specifically excluded from the Case-Shiller Index.
In some markets, “excluded” home types outnumber included ones.
And, lastly, the Case-Shiller Index is flawed in that it takes 2 months to gather data and report it. It’s nearly October, yet we’re still discussing the real estate market as it existing in July. For buyers and sellers , July in ancient history.
The Case-Shiller Index is useful for tracking long-term trends in housing, but does little to help individuals with their choices to buy or sell a home. For relevant, recent real estate data, talk to a real estate agent in your market. Real estate agents are often the best source for real-time, real estate data.
New Home Sales Figures Better Than Reported
According to the Census Bureau, the number of new homes sold slid for the fourth straight month in August, easing 2 percent from July. On a seasonally-adjusted, annualized basis, home buyers bought 295,000 newly-built homes last month.
August marked the lowest new home sales tally since February. News outlets are jumping on the story, with at least one calling it a “blow” to the housing market.
That’s an unfair assessment.
It’s tough for the new home market to tally big sales numbers when the number of homes for sale is dwindling and, in August, that’s exactly what we saw. The number of new homes for sale nationwide fell to 162,000 last month. This is the fewest number of new homes for sale since at least 1993, the first year the Census Bureau tracked such data.
In other words, using New Home Sales as a housing market gauge may be misleading. A better metric may be new home supply.
In August, new home supply edged 0.1 months higher to 6.6 months. This means that, at today’s sales pace, the complete new home inventory would be sold out in 6.6 months.
It’s the second-fastest reading in 2 years.
The new home market represents an interesting opportunity for home buyers. Builders are facing new competition from bank-owned homes and foreclosures, dragging builder confidence to all-time lows. Furthermore, builders have low expectations for the next 6 months.
As a buyer, you can use this to your advantage. Builders may be more willing to negotiate on price and finishes versus this time last year. You may find a good “deal” in new construction once you go in search of it.
Existing Home Sales Jump; Home Supplies Falling
Are home resales rebounding?
According to the National Association of REALTORS®, Existing Home Sales rose 8 percent in August from the month prior, and 19 percent as compared to August of last year.
“Existing homes” are homes that are previously owned; ones that cannot be considered new construction.
A total of 5.0 million existing homes were sold last month on a seasonally-adjusted, annualized basis. This is slightly better than the 12-month home resale average, a statistic partially powered by “distressed sales”. Distressed homes — homes in various stages of foreclosures or sold via short sale – accounted for 31 percent of all home resales in August.
At the current rate of sales, the national home resale inventory would be depleted in 8.5 months. This pace is a full month faster as compared to July, and the lowest home supply reading since March 2011.
Other noteworthy facts from the August Existing Home Sales report :
- There are currently 3.58 million existing homes for sale nationwide
- 29 percent of home buyers paid cash in August
- Real estate investors bought 22% of homes in August, up from 18% in July
Home prices are based on Supply and Demand and, at least right now, it appears the supply is dropping. Furthermore, with mortgage rates at all-time lows, it’s reasonable to expect demand to pick up. These two conditions should lead home prices higher.
If you’re shopping for a home right now, recognize the trends and work them to your advantage. It may be “cheapest” to buy now.
How To Clean Your Home Gutters
With the change of season, it’s a good time to make sure your home’s gutter system is clean and well-functioning.
Home gutters serve a specific purpose. By capturing and funneling rainwater away from a home “footprint” water damage to walls, windows and roofing can be minimized. A well-functioning gutter system can keep a foundation safe from long-term structural damage.
Damaged or dirty gutters can lead to major home damage that may not be covered by insurance.
For homeowners , keeping clean gutters is essential. Luckily, with the right tools, gutter maintenance can be a do-it-yourself job.
First, gather the necessary tools. You’ll need a ladder for climbing; a bucket for holding debris; a hose for flushing your gutters; and a small, scooping tool such as a trowel.
Next, carefully climb to your gutter. Using your hands, scoop large debris and place it in the bucket. Use the trowel to get to hard-to-reach places and for removing sticks and leaves. For safety, do not stretch to reach the next section of gutter.
After clearing the first gutter portion, step down from the ladder, move it to the next section of gutter, and repeat. Do this until all gutter sections are free from debris.
Next, find a garden hose with a spray attachment. Carry the hose up the ladder with you to the highest point of your gutter system — usually opposite the downspout. With the water supply on, spray water into the gutter to flush the remaining debris.
If the water fails to drain, there’s likely a clog in the downspout. Using a screwdriver, separate the downspout, find the clog, and remove it. Or, if you find standing water, adjust the slope of your gutter by removing the gutter hangers, fixing the slope, and re-attaching the hangers.
A gutter system should slope roughly one-quarter inch for every 10 feet of gutter.
Gutter maintenance is a twice a year task that you can do yourself. However, if you’re uncomfortable on a ladder, or prefer to hire professionals, that’s okay, too. As with everything in home maintenance, it’s safety first.
