In the US, sale of previously owned housing units showed 2.4% rise, in December 2014 as compared to November 2014. The National Association of Realtors (NAR) recently suggested that the full -fledged transactions of existing housing units showed positive trends and they closed at 5.04 million approximately. The figure shows that there is a rise of 2.4% when compared with November 2014 that registered a downward movement, which ended with sale of 4.92 million units. When the overall sales data was analyzed, it showed that sale of previously owned houses rose by 3.5%.
Notes: National Association of Realtors, Existing Home Sales© [EXHOSLUSM495S], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/EXHOSLUSM495S/, January 26th 2015
According to the statistical data, the overall sale of pre-used homes figured at 4.93 million for the year 2014. It represents a drop when compared with 2013 that closed at 5.09 million units. The drop in yearly sales is the result of rise in prices of pre-used homes. During the year 2014, the national median price of previously owned home stood at $208,500, which was a 5.8% rise over average price of $197,100 for 2013.Prices were also at their highest level when compared with 2007 when the national median price figured at $219,000.
Notes: National Association of Realtors, Existing Home Sales: Housing Inventory© [HOSINVUSM495N], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOSINVUSM495N/, January 26, 2014.
Drop of Homes Inventory
During December 2014, the supply of previously owned homes meant for sale dropped to 11.1% at 1.85 million units, which is 4.4-month supply of recent sales pace. According to experts, 6-month supply indicates healthy condition of market. The previous figure of month supply registered drop from November 2014, when the available stock of pre-used homes indicated month supply of 5.1 months. The unsold stock is 0.5% lower than 2013, when there were approximately 1.86 million pre-owned homes meant for sale.
Notes: National Association of Realtors, Existing Home Sales: Months Supply© [HOSSUPUSM673N], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOSSUPUSM673N/, January 26, 2014.
Drop in Supply
Lawrence Yun, the Chief Economist from NAR said that the drop in supply during December 2014 raised concerns regarding affordability for months to come, as minimal selection could potentially cause faster price increase due to demand from buyers. Lawrence further added that home prices and cost of rents continued to strengthen against wages and they appeared troublesome for potential buyers who were building savings to secure down payment while searching for pre-used homes at their expected price ranges. 2014 commenced with retarded growth of housing sales. But, the process gathered momentum from the second half of 2014. Yun said that the increment of stock during summer lead to improvement in sales. Among other reasons that were responsible for sales growth were revival in economic conditions and moderation of prices. According to statistical report, when compared with the first half of 2014, the sales figure rose by 8% during remaining six months of the year. The report of Freddie Mac suggested that the fixed rate of mortgage loans dropped at 3.86% during December 2014, which was the lowest level. So, increment in home purchasing activities was a natural derivative.
First Time Home Buyers
A report prepared by NAR said that the number of first time home purchasers was significantly low, in addition to plummeted sales pace for the year 2014. During the month of November 2014, the share of first time homebuyers was 31% and for the month of December, it was 29%, but the figure was high when compared with same month of 2013. For the second year in a row, during 2014, fresh homebuyers stood at average of 29% of realty market. Many realty companies are hoping that the new FHA policy announced by the President Barrack Obama, which aims at lowering mortgage insurance premiums will facilitate homebuyers for investing money in housing market. The new plan will be made effective from January 26, 2015.
Distressed sales – foreclosures and short sales – were up slightly in December (11 percent) from November (9 percent) but are down from 14 percent a year ago. Eight percent of December sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in December (17 percent in November), while short sales were discounted 12 percent (13 percent in November).
All-cash sales were 26 percent of transactions in December, up from 25 percent in November and 32 percent in December of last year. Individual investors, who account for many cash sales, purchased 17 percent of homes in December, up from last month (15 percent) but down from December 2013 (21 percent). Sixty-three percent of investors paid cash in December.
The sales increased 3.1% in the Northeast compared to previous year. With the annual rate of 660,000, the pace declined in December 2014 is 2.9%.
Notes:National Association of Realtors, Existing Home Sales in Northeast Census Region©[EXHOSLUSNEM495S], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/EXHOSLUSNEM495S/, January 26, 2015.
In December, there was 3.5% decline in sales to 1.09 million, which is 2.7% lower than previous year.
Notes: National Association of Realtors, Existing Home Sales in Midwest Census Region© [EXHOSLUSMWM495N], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/EXHOSLUSMWM495N/, January 26 2015.
South has shown 3.8% climb in home sales to 2.17 million, which is a 7.4% increase from Dec 2013.
Notes: National Association of Realtors, Existing Home Sales in South Census Region© [EXHOSLUSSOM495S], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/EXHOSLUSSOM495S/, January 26, 2015.
Sales rose to 1.12 million i.e. a 9.8% jump in the West over previous month. This jump is 2.8% higher than a year earlier
Notes: National Association of Realtors, Existing Home Sales in West Census Region© [EXHOSLUSWTM495S], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/EXHOSLUSWTM495S/, January 26, 2015.