U.S. Existing-Home Sales Slip in June on Contract Cancellations, but Prices Stabilize

Palm Coast, FL – July 20, 2011 – It’s that time of the month when home and condo sales stats are announced. Flagler County residents should not be mislead by broader market reports. Sales reported by the National Association of Realtorsº includes single-family, townhomes, condominiums and co-ops. Florida reports single-family homes and condos separately. U.S. sales and Florida home sales are off slightly from last June. Florida condo sales increased.

GoToby.com has reported in the past that the Palm Coast/Flagler market seems to be leading the rest of the market. June sales of single-family homes were stronger than in any month since June 2006. Sales of 180 homes surpassed last year’s numbers by 22%. This June’s condo sales grew as well with 37 units sold vs. 22 in the past year. The median condo selling price was also up slightly.

A comparison of median selling prices exposes one reason for the apparent strength in the Palm Coast Flagler home market. Flagler’s median selling price for single-family homes was $118,150. This compares to the $138,000 for Florida and $166,700 nationally. Our area remains an relatively undiscovered gem combining great lifestyle with very affordable homes.

Note: These figures may differ slightly from earlier GoToby.com reports of June sales because of delays in reporting to the MLS system. The numbers reported here are the most current.

Existing-home sales eased in June as contract cancellations spiked unexpectedly, although prices were up slightly, according to the National Association of Realtors®.

Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable while the condo sector weakened.

Total existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 0.8 percent to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8 percent below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit.

Lawrence Yun, NAR chief economist, said this is an uneven recovery. “Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month,” he said. “The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year.”

Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

The national median existing-home price² for all housing types was $184,300 in June, up 0.8 percent from June 2010. Distressed homes³ – foreclosures and short sales generally sold at deep discounts – accounted for 30 percent of sales in June, compared with 31 percent in May and 32 percent in June 2010.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.51 percent in June, down from 4.64 percent in May; the rate was 4.74 percent in June 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said home sales should be higher. “With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales,” he said. “Even with job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals. Although proposals being considered in Washington could effectively put more restrictions on lending, some banking executives have hinted that credit may return to more normal, safe standards in the not-too-distant future, but the tardiness of this process is holding back the recovery.”

Phipps added that lower mortgage loan limits, due to go into effect on October 1, already are having an impact. “Some lenders are placing lower loan limits on current contracts in anticipation they may not close before the end of September. As a result, some contracts may be getting cancelled because certain buyers are unwilling or unable to obtain a more costly jumbo mortgage,” he said.

Total housing inventory at the end of June rose 3.3 percent to 3.77 million existing homes available for sale, which represents a 9.5-month supply⁴ at the current sales pace, up from a 9.1-month supply in May.

All-cash transactions accounted for 29 percent of sales in June; they were 30 percent in May and 24 percent in June 2010; investors account for the bulk of cash purchases. [50% of Flagler’s home sales were cash.]

First-time buyers purchased 31 percent of homes in June, down from 36 percent in May; they were 43 percent in June 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in June, unchanged from May; they were 13 percent in June 2010.

The balance of sales was to repeat buyers, which were a 50 percent market share in June, up from 45 percent in May, which appears to be a normal seasonal gain.

Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June, but are 7.4 percent below a 4.58 million pace in June 2010. The median existing single-family home price was $184,600 in June, up 0.6 percent from a year ago.

Existing condominium and co-op sales fell 7.0 percent to a seasonally adjusted annual rate of 530,000 in June from 570,000 in May, and are 18.0 percent below the 646,000-unit level a year ago. The median existing condo price⁵ was $182,300 in June, up 1.8 percent from June 2010.

Regionally, existing-home sales in the Northeast fell 5.2 percent to an annual pace of 730,000 in June and are 17.0 percent below June 2010. The median price in the Northeast was $261,000, up 3.1 percent from a year ago.

Existing-home sales in the Midwest rose 1.0 percent in June to a pace of 1.04 million but are 14.0 percent below a year ago. The median price in the Midwest was $147,700, down 5.3 percent from June 2010.

In the South, existing-home sales increased 0.5 percent to an annual level of 1.86 million in June but are 5.6 percent below June 2010. The median price in the South was $159,100, down 0.1 percent from a year ago.

Existing-home sales in the West declined 1.7 percent to an annual pace of 1.14 million in June and are 2.6 percent below a year ago. The median price in the West was $240,400, up 9.5 percent from June 2010.

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.

Florida’s existing condo sales rose 8 percent in June with a total of 7,941 units sold statewide compared to 7,330 sold in June 2010, according to the latest housing data released by Florida Realtors®. The statewide existing condo median sales price last month was $93,900; a year earlier, it was $92,300 for a 2 percent increase. The national median existing condo sales price was $165,400 in May 2011, according to the National Association of Realtors® (NAR).

“Promising signs continue for a slowly strengthening economy and housing market,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage interest rates remain historically low and affordability conditions are strong.”

Nineof Florida’s metropolitan statistical areas (MSAs) reported higher existing condo sales in June; six MSAs had higher existing home sales.

In Florida’s year-to-year comparison for existing home sales, a total of 17,597 homes sold last month compared to 18,402 homes sold in June 2010 for a decrease of 4 percent. The statewide median sales price for existing homes last month was $138,000; a year earlier, it was $141,200 for a 2 percent decrease.

However, June’s statewide existing home median price was about 1.8 percent higher than it was in May. Sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes, according to NAR analysts. The median is the midpoint; half the homes sold for more, half for less.