Timberline Realty Real Estate News

Stable Existing-Home Sales Expected in Early 2008, then Gradual Rise

WASHINGTON, January 08, 2008

Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said there is a pull and tug exerting itself on the market.  "On the one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sales decline," he said.  "On the other, consumers continue to wait for additional signs of market stabilization.  There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase.  As a result, the exact timing and the strength of a home sales recovery is a bit uncertain.  A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in November, fell 2.6 percent to a reading of 87.6 from a strong upward revision of 89.9 in October, but remains above the August and September readings and indicates a broad stabilization.  The index was 19.2 percent below the November 2006 level of 108.4.  "Although there could be some minor slippage in the first quarter, existing-home sales should hold in a narrow range before trending up," Yun said.

The PHSI in the South rose 2.3 percent in November to 100.7 but is 19.8 percent below a year ago.  In the West, the index slipped 2.1 percent to 86.6 but is 18.5 percent lower than November 2006.  The index in the Midwest fell 4.1 percent in November to 82.1 and is 18.6 percent below a year ago.  In the Northeast, the index dropped 13.0 percent in November to 70.1 from a spike in October, and is 19.1 percent below November 2006.

Existing-home sales for 2007 will probably total 5.66 million, the fifth highest on record, then edge up to 5.70 million this year and 5.91 million in 2009, compared with 6.48 million in 2006.  Existing-home prices for 2007 are likely to be down 1.9 percent to a median of $217,600, hold even this year and then rise 3.1 percent in 2009 to $224,400.

"Rising home prices in the affordable midsection of the country are likely to offset declines in some of the previously hot markets," Yun said.

There are wide variations in housing market conditions around the country, with nearly two-thirds of the metropolitan areas showing price gains.  Healthy increases in metro prices are occurring in places such as Pittsburgh; Beaumont-Port Arthur, Texas; San Jose, Calif.; and Bismarck, N.D.

"Our consumer survey shows buyers today are in it for the long-haul, planning to stay in their home for a median of 10 years.  This is a wise approach to housing because the data shows the longer you own, the better your investment," Yun said.

New-home sales are projected at 773,000 for 2007, and declining to 669,000 this year before rising to 730,000 in 2009, but well below the 1.05 million 2006.  With an appropriate slowdown in production, housing starts, including multifamily units, are forecast at 1.36 million for 2007 and 1.09 million this year before edging up to 1.10 million in 2009; starts totaled 1.80 million in 2006.  The median new-home price should drop 2.1 percent to $241,400 for 2007, and then rise 0.4 percent to $242,200 this year and gain another 5.9 percent in 2009.

"Some policy changes, such as raising the loan limit on conventional mortgages, would provide a significant boost to home sales, increase liquidity, strengthen home prices and lessen foreclosures, but it is unclear as to if and when the measure will be implemented," Yun said.  NAR strongly supports raising the Government-Sponsored Enterprise loan limit to at least $625,000 from the current $417,000 so that more consumers will have access to lower interest rates on safe conforming mortgages.  "NAR estimates that raising the GSE loan limit will result in interest rates savings for an additional 330,000 homeowners," he said.

NAR also encourages the Fed to make a single lump-sum cut in the Fed funds rate to 3.5 percent at the January Federal Open Market Committee meeting, rather than a series of modest cuts throughout the year.  Consumers are also looking to market-time interest rates, and the expectations of further rate cuts are pushing some home buyers to delay.  Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts," Yun added.

The 30-year fixed-rate mortgage is expected to rise slowly to the 6.3 percent range by the end of this year, but an additional cut in the Fed funds rate would lower short-term interest rates.

Growth in the U.S. gross domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent growth rate in 2006; GDP growth will probably be 2.0 percent this year.

After averaging 4.6 percent for both 2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the second half of 2008.  Inflation, as measured by the Consumer Price Index, is projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent in 2006.  Inflation-adjusted disposable personal income is forecast to grow 3.1 percent for 2007, the same as in 2006, and then grow 1.6 percent this year.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org

When It Comes to Remodeling, It’s What’s Outside That Counts, Realtors® Report

WASHINGTON, December 30, 2007

Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report.  Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades.

The most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale.  Wood deck additions and wood window replacements also returned more than 80 percent of costs, at 85 percent and 81 percent, respectively.  On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

"The results of this year’s Cost vs. Value report underscore the importance of curb appeal in the buyer’s eye," said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif.  "Realtors® know what attracts buyers in their local markets and can help your house put its best façade forward, so to speak – it’s another way Realtors® add value to the real estate transaction."

The 2007 Remodeling Cost vs. Value Report compares construction costs with resale values for 29 midrange and upscale remodeling projects comprising additions, remodels and replacements in 60 markets across the country.  Data are provided for nine U.S. regions, following the divisions established by the U.S. Census Bureau.  This is the 10th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.

Four new projects were added this year: the aforementioned wood deck addition, a back-up power generator, and both a midrange and upscale garage addition. Nationally, the back-up power generator only returned 58 percent of the investment on resale, although the return was highest in the West South Central region, which comprises Arkansas, Louisiana, Oklahoma, and Texas, at 68 percent.  Buyers in the Pacific region of Alaska, California, Hawaii, Oregon and Washington value their garages: The midrange garage addition returned nearly 70 percent nationally but 88 percent in this region, while the upscale garage addition returned approximately 65 percent nationally but 78 percent in this area.

Homeowners in the Pacific region could also expect to see some of the highest percentages of remodeling expenses returned at resale, with 13 of the 29 projects returning 90 percent or higher of project costs.  Homeowners in the East North Central region of Illinois, Indiana, Michigan, Ohio and Wisconsin might expect some of the lowest returns; only one project – upscale fiber cement siding – returned more than 80 percent upon resale (82 percent of costs recouped), while nine projects returned less than 60 percent of project costs.

The least profitable projects were a back-up power generator, sunroom addition, and home office remodel.  The back-up power generator returned the lowest percentage of initial cost in the East North Central, New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), Pacific, and West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

Sunrooms are least popular in the East South Central (Alabama, Kentucky, Mississippi and Tennessee), Mountain (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming), and West South Central regions.  Home office remodels return the lowest percentage of project costs in the Middle Atlantic (New Jersey, New York and Pennsylvania) and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions.

Gaylord explained that the resale value of any given remodeling project depends on a variety of factors.  "When considering a remodeling project, particularly with an eye toward resale, it’s important to evaluate your home’s current condition, how the project will change the existing space in your home, as well as how your remodeled home will compare to other homes in your community," said Gaylord.

"For example, using a breakfast nook to expand the kitchen seems like a good use of space, but using the same space to add a first-floor bathroom in an older home that doesn’t have one will draw more buyers," Gaylord said.  "Realtors® see hundreds, if not thousands, of homes every year with their buyer clients and can provide valuable insight into what projects and improvements will make a difference with buyers in your area."

Results of the report are summarized in the December 2007 issue of REALTOR® Magazine.  To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 60 cities covered by the report, visit http://www.costvsvalue.com/minneapolis.html.  "Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

For more information, contact:
Stephanie Singer, 202/383-1050, ssinger@realtors.org

Existing Home Sales to Trend Up in 2008

WASHINGTON, December 10, 2007

Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors®.  However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, said the worst part of the credit crunch has already worked its way through the data.  "The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming," he said.  "Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels."

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September.  It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8.  "The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007," Yun said.

The PHSI in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago.  In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006.  The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago.  In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.

"The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans," Yun said.  "Lawmakers need to understand that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability."

Existing-home sales are likely to total 5.67 million this year, the fifth highest on record, rising to 5.70 million in 2008, in contrast with 6.48 million in 2006.  Existing-home prices should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.

"Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008.  I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation," Yun said.

"Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases," he said.  "The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price."

Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash.  "We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions."

New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million 2006; no sustained improvement is seen for new homes until 2009.  Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year.  The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.

The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.

Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.

The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008.  Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006.  Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.

For more information, contact:
Walter Molony, 202/383-1177, a href="mailto:wmolony@realtors.org">wmolony@realtors.org

What Buyers Want

Highlights from NAR's Profile of Buyers' Home Feature Preferences

Times have changed for home sellers, and the housing market isn't what it was.  Sales of both existing and new homes are down, price appreciation has fallen from its breakneck, double-digit pace of a year ago, and the supply of homes available for sale – housing inventory – is at record levels.  The mortgage market is still recovering from the subprime fallout.  While owners trying to sell their homes in the current housing "doldrums" certainly face challenges, home buyers benefit from an ample supply of homes and the opportunity to find homes with features and amenities that most closely match their needs.

So how can sellers "attract" buyers to their homes. One way is to make sure that homes listed for sale offer those potential buyers the features that they really want.  NAR’s recent 2007 Profile of Buyers’ Home Feature Preferences looks at those home features considered important during the search process, the presence of those desired features in the homes purchased, and in those cases when the home purchased lacks particular features, home buyers’ willingness to pay extra for them.  Below we present highlights from the Profile that address those issues.

Home Features Desired Most by Potential Buyers

The most desired home feature was central air conditioning, ranked "very important" by nearly three quarters of home buyers.  An oversized (two-or-more car) garage, a walk-in closet in the master bedroom, and a backyard or play area were also rated as "very important" by at least half of recent home buyers.

Repeat vs. First-time Buyers.  The preference for certain home features can differ based on whether a potential buyer is a repeat buyer or a first-time home purchaser.  Repeat buyers placed more importance than first-time buyers on almost all home features examined, with the exception of proximity to work and a backyard or play area.  The features repeat buyers were much more likely to desire than he first-time buyers included oversized garages, a walk-in-closet in the master bedroom and a separate shower in the master bathroom.  Buyers of new homes were also more likely than buyers of previously owned homes to consider most home features, including many luxury items, to be very important.

Regional and Location Differences.  The importance buyers place on particular home features also varies by region.  For example, while buyers in all regions rated central air conditioning as one of the top two most important features, it was very important to over 90 percent of buyers in the South and over 80 percent in the Midwest, compared to 41 percent in the Northeast, and 59 percent in the West.  Buyers in the South also placed higher importance on newly built homes, porches, single-level homes and monitored security systems.  Buyers in the West had a higher-than-average preference for lawn sprinkler systems, fencing, patios, and oversized garages.  Fully or partially finished basements were more important in the Midwest, and reserved parking in the Northeast.

Buyers' preferences also differ by the location of the home purchased, mostly based on the neighborhood features.  Those who purchased a home in an urban area had a higher-than-average preference for being near public transportation, reserved parking, and proximity to work.  Suburban home buyers indicated a higher preference for oversized garages, walk-in closets, and new homes.  Buyers in rural areas were more likely than average to prefer wooded lots and a water treatment or filtration system.

Preferences by Age.  Home feature preferences also vary by age of the home buyer.  For example, among older buyers, features such as a walk-in-closet in the master bedroom and a separate shower enclosure in the master bathroom were more often viewed as very important; and a backyard or play area, and proximity to work and schools were less often considered as important among these buyers.  Buyers over 44 years old had a higher preference for single-level homes than the younger buyers.  Buyers aged 55 or older were more interested in homes that are cable or satellite TV ready, equipped with a lawn sprinkler system, and on a flat lot.  Buyers over 64 years were more likely to prefer sidewalks and an air filtration system, and less likely to prefer fencing and porches.

Features in the Home Actually Purchased

Home buyers consider many features as important when searching for a home, but they sometimes need to make compromises when actually purchasing a property.  Among recent home buyers who considered each of the features examined as somewhat or very important, the home purchased most likely included cable-satellite TV readiness, high speed Internet access, central air conditioning, an oversized garage, and neighborhood features such as proximity to schools, to a park or playground, and to shopping.  Among the desired features least likely to be present in the home purchased were an intercom system, a water treatment or filtration system, homes with handicap accessibility features, and extra-wide doorways.

Home Features Ranked as "Very Important" (percent of survey respondents)
Central Air Conditioning	74
Garage (2 or more spaces)	57
Walk-in Closet in Master Bedroom	53
Backyard / Play Area	50
Cable / Satellite TV Ready	46
High-speed Internet Access	40
Seperate Shower in Master/Main Bath	36
Patio	36
Fencing	36
Home less than 10 years old	33
	| 0	| 10	| 20	| 30	| 40	| 50	| 60	| 70	| 80
	percent
Source: The 2007 NAR Profile of Buyers' Home Feature Preferences

Repeat vs. First-time Buyers.  There are differences on what features buyers comprised on depending on whether they are repeat purchasers or those buying their first home.  Repeat buyers were more likely to purchase a home with most of their preferred features, including many luxury items.  Compared to first-time buyers, they compromised most on neighborhood features, such as proximity to work, a park or playground, and public transportation.  Buyers of new homes did not make many compromises on the size or luxury items, but mostly on neighborhood features.

Regional Differences.  The likelihood that a preferred feature is present in the home purchased varies by region.  Desired features much more likely to be present by region included intercom systems, hardwood floors, bay windows, skylights, proximity to public transportation and reserved parking in the Northeast; a water treatment or filtration system, an intercom system, and homes more than 100 years old in the Midwest; a tennis court, being near or on a golf court, porches, and a monitored security system in the South; and lawn sprinkler systems and fencing in the West.  Among the desired features, the ones much less likely to be present in homes purchased in each region compared to the national average were lawn sprinkler systems, fencing, patios, and new homes in the Northeast; lawn sprinkler systems, fencing, and monitored security systems in the Midwest; proximity to public transportation, fully or partially finished basements, and intercom systems in the South; and usable/ accessible attics, wooded lots/trees, and whirlpool baths in the West.

Age of Buyer.  Recent home buyers aged 25 to 44 purchased a home with most of the features they desired. As the age of the buyer increased, the likelihood of compromises increased, particularly among those aged 65 and over, and especially on neighborhood features.  For example, less than 50 percent of buyers 65 or older purchased a single level home, despite ranking this feature as important.

"Will Pay for AC"

Home buyers value some features so much that they reported being willing to pay more for a home if that feature was present.  The most frequently reported features for which buyers would be willing to pay more included central air conditioning, walk-in closets, hardwood floors, high-end kitchen appliances, oversized garages, and patios.  The least frequently mentioned features for which buyers would pay extra included homes that were more than 100 years old, a tennis court, a sloping lot, being on or near golf course, and handicap accessibility.  Home buyers who purchased a home without a valued feature were willing to pay the most for a waterfront property, typically an extra $4,760; a home less than 10 years old, typically an extra $3,800; and fully or partially finished basement, typically an extra $2,970.

Among buyers who purchased homes below and above the median price, the rank ordering of the features for which they were willing to pay extra changed little.  However, there were significant differences in the amounts that buyers would typically pay for some of the features.  For example, buyers of homes below and above the median price were willing to pay the most for a waterfront property; but among those with homes priced below the median, the typical extra amount was $3,360 and $8,240 among those homes priced above the median.  For a cul-de-sac lot, and proximity to shopping or public transportation, those buyers with above median priced homes were willing to pay almost twice as much as those with homes below the median price.  For features including central vacuum, high-speed Internet access, and intercom system, there was not much difference in the extra amount these two groups of buyer were willing to pay.

What Does It Mean to REALTORS® and Their Clients

The information provided in the Profile provides insights into the priorities of home buyers.  For instance, sellers considering putting their home on the market may want to consider what "buyer preferred" features might be added to the home before it is listed.  By so doing, the home could attract more buyer traffic, and likely increase the sales price.  REALTORS® who are working with clients to sell homes can more accurately determine the "value" of each home feature and thus determine a proper listing price.  The data and analysis in the 2007 Profile of Buyers' Home Feature Preferences is another tool for real estate professionals to use as they market their clients' homes to potential buyers.

The 2007 NAR Profile of Buyers' Home Feature Preferences is based on a survey conducted earlier this year.  The 39-question survey questionnaire was mailed to a random national sample of 40,000 home buyers who purchased a home between late 2005 and early 2007.  The survey gathered information about those features that buyers considered very important when searching for a home and whether or not those features were present in the home they actually purchased.

Pending Home Sales Index Falls Largely on Mortgage Tightening

WASHINGTON, September 05, 2007

Pending home sales, a forward-looking indicator, shows existing-home sales are likely to decline in coming months as mortgage disruptions work their way through the housing market, according to the National Association of Realtors®.

The Pending Home Sales Index*, based on contracts signed in July, fell 12.2 percent to a reading of 89.9 in July from the June index of 102.4, and was 16.1 percent lower than July 2006 when it stood at 107.1.

Lawrence Yun, NAR senior economist, said abnormal factors are clouding the horizon.  "It’s difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment," he said.

"These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans.  Some consumer concerns remain, but since mid-August the market has been stabilizing somewhat.

"If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later," Yun said.

The index is a leading indicator for the housing sector, based on pending sales of existing homes.  A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Annual changes in the index are more closely related to actual market performance than are month-to-month comparisons.  As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

The PHSI in the South declined 6.6 percent in July to 104.0 and was 15.2 percent below a year ago.  In the Northeast, the index fell 12.2 percent from June to 84.3 and is 10.0 percent lower than July 2006.  The index in the Midwest dropped 13.1 percent in July to 80.4 and was 15.8 percent below a year ago.  In the West, the index fell 20.8 percent in July to 82.3 and was 21.8 percent below July 2006.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Existing-Homes Sales Stable In July

WASHINGTON, August 27, 2007

Existing-home sales were essentially unchanged in July, with increases in the West and Northeast offset by a decline in the Midwest, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 0.2 percent to a seasonally adjusted annual rate 1 of 5.75 million units in July from an upwardly revised pace of 5.76 million in June, and are 9.0 percent below the 6.32 million-unit level in July 2006.

Lawrence Yun, NAR senior economist, said the market is holding on despite temporary mortgage disruptions.  "Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months," he said.  "Some buyers with contracts have been scrambling when loan commitments did not materialize at the last moment, while other potential buyers are simply waiting for the mortgage market to stabilize.

"The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom.  Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.70 percent in July, up from 6.66 percent in June; the rate was 6.76 percent in July 2006.  Last week, Freddie Mac reported the 30-year fixed rate dropped to 6.52 percent.

The national median existing-home price2 for all housing types was $228,900 in July, down 0.6 percent from July 2006 when the median was $230,200, the highest monthly price on record.  The median is a typical market price where half of the homes sold for more and half sold for less.

Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said that mortgages are available for the majority of potential buyers.  "For buyers able to qualify for conventional financing, there are ample opportunities in the current market," she said.  "Availability and pricing of conventional loans are reasonable, and FHA-insured mortgage applications have been rising as low- and moderate-income buyers seek alternatives to subprime loans.  If buyers are in it for the long haul, now can be a good time to get into your home."

Combs added it’s important to boost FHA’s viability.  "NAR is advocating for a stronger FHA to help creditworthy borrowers who may be trapped in subprime loans with unfavorable terms," she said.  "We’d also like to see the elimination of prepayment penalties, which can trap borrowers in mortgages they can no longer afford."

Single-family home sales slipped 0.4 percent to a seasonally adjusted annual rate of 5.00 million in July from an upwardly revised level of 5.02 million in June, and are 9.3 percent below the year-ago pace of 5.51 million units.  The median existing single-family home price was $228,600 in July, down 1.0 percent from July 2006.

Existing condominium and co-op sales rose 1.4 percent to a seasonally adjusted annual rate of 750,000 units in July from 740,000 in June, but are 7.5 percent below the 811,000-unit level in July 2006.  The median existing condo price3 was $230,600 in July, up 2.4 percent from a year ago.

Regionally, existing-home sales in the West rose 1.8 percent in July to an annual pace of 1.12 million, but are 15.2 percent below a year ago.  The median price in the West was $349,400, up 0.9 percent from July 2006.

Existing-home sales in the Northeast increased 1.0 percent to a level of 1.02 million in July, but are 2.9 percent lower than July 2006.  The median existing-home price in the Northeast was $290,900, up 5.9 percent from a year ago.

Existing-home sales in the South were unchanged at an annual rate of 2.26 million in July, but are 10.7 percent below a year ago.  The median price in the South was $186,300, down 3.2 percent from July 2006.

Existing-home sales in the Midwest fell 2.2 percent in July to a level of 1.35 million, and are 5.6 percent below July 2006.  The median price in the Midwest was $173,800, which is 1.8 percent below a year ago.

The National Association of Realtors®, "The Voice for Real Estate," is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Existing-home sales for August will be released September 25.  The next Pending Home Sales Index will be on September 5 and the forecast will be revised September 11.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

NAR Finds That Despite Rising Gas Prices, More Home Buyers Want Oversized Garages

WASHINGTON, Aug 07, 2007

Home buyers in increasing numbers want garages with two or more spaces in their homes, according to the 2007 Profile of Buyers’ Home Feature Preferences, released today by the National Association of Realtors®.

Since the last survey in 2004, oversize garages saw the biggest growth in terms of what recent buyers considered very important in a home, gaining 16 percentage points to 57 percent.  Among buyers who purchased homes without this feature, 56 percent of them said they would have paid more for an oversize garage, compared to only 6 percent in the 2004 survey.

Other priorities for today’s home buyers include air conditioning, with three out of every four respondents ranking this as "very important," and a walk-in closet in the master bedroom, which was very important to 53 percent of respondents.  Hardwood floors and granite countertops each gained 7 percentage points from the 2004 survey, with 28 percent and 23 percent, respectively, of buyers viewing these features as "very important."  Gaining 6 percentage points was cable/satellite TV-ready, at 46 percent.

The survey reports responses from buyers who purchased homes in 2006.  Home buyers were asked about 75 features and room types to assess the importance of each.

"Realtors® see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home," said NAR President Pat V. Combs, of Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt.  "This insight is one more way Realtors® add value to the real estate transaction and why nearly eight out of 10 recent buyers used a real estate professional when buying their home."

According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase.  Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom. New homeowners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.

More than half of home buyers believe their home has high investment potential, and another four out of 10 believe it has moderate investment potential.  Only 3 percent felt their home’s investment potential was low.

"The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment," said Paul Bishop, NAR manager of real estate research.  "Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make."

Energy efficiency was more important to new-home buyers than buyers of existing homes, with 65 percent of new-home buyers saying it was very important compared to 39 percent for buyers of existing homes.  Older buyers placed a higher priority on energy efficiency than did younger buyers – 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.

The survey identified some regional preferences in home features.  For home buyers in the South and Midwest, central air conditioning was a priority, with 91 percent and 81 percent, respectively, saying this feature was very important.  Sixty-six percent of buyers in the South thought a walk-in closet in the master bedroom was very important, while 61 percent of Midwesterners valued an oversized garage.  In the Northeast, the highest percentage of buyers placed a premium on a backyard or play area (53 percent), followed by central air conditioning at 41 percent.  Two-thirds of buyers in the West want oversized garages (66 percent), followed by central air conditioning at 59 percent.

Age was the biggest differentiation in what buyers were looking for in a home.  Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).  Most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).  More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.

For those who purchased a home without it, 65 percent of buyers said they would be willing to pay a median $1,880 extra for central air conditioning.  One out of four buyers was willing to pay a median of $4,760 more for waterfront property.

Homes are getting bigger, but have fewer bedrooms.  From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during the same period.  The median home age reported in the current survey is 12 years, down from 15 years in 2004.

To order a copy of the report, visit www.realtor.org/research and click on "Latest Research Products" or call 800/874-6500.  The cost is $50 for members and $125 for non-members.

For more information, contact:
David Greer, 202/383-1128, dgreer@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Prices Rise, Existing-Home Sales Decline in June

WASHINGTON, July 25, 2007

Sales of existing homes fell in June with some potential buyers staying on the sidelines, but prices rose modestly as inventories eased, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3.8 percent to a seasonally adjusted annual rate of 5.75 million units in June from a downwardly revised level of 5.98 million in May, and are 11.4 percent below the 6.49 million-unit pace in June 2006.

Lawrence Yun, NAR senior economist, said some consumers are uncertain.  "Home buyers have been getting mixed signals about the housing market, which is causing some of them to hesitate," he said.  "Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path.  Although general buying conditions remain favorable for long-term home buyers, it appears some buyers are looking for more signs of stability before they have enough confidence to make an offer."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.66 percent in June, up from 6.26 percent in May; the rate was 6.68 percent in June 2006.

"Two bright spots in the June report are a decline in housing inventory and a modest gain in home prices," Yun said.  "Although we’ve seen seasonal month-to-month price increases over the past four months, this is the first time in 11 months that the median home price is higher than the year-ago price."

The national median existing-home price for all housing types was $230,100 in June, up 0.3 percent from June 2006 when the median was $229,300.  The median is a typical market price where half of the homes sold for more and half sold for less.

Total housing inventory fell 4.2 percent at the end of June to 4.20 million existing homes available for sale, which represents an 8.8-month supply at the current sales pace, the same as a downwardly revised 8.8-month supply in May.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said that local market conditions vary widely.  "Consumers should avoid making decisions based on what they hear about the national market because all real estate is local," she said.

"There are pockets around the country where home sales are quite strong, so you really need to consult with a knowledgeable real estate professional about local market conditions – experience is one way Realtors® add value to the real estate transaction, and a reputable agent is your best resource to navigate the current market, whether it’s moving up or down," Combs said.

Single-family home sales fell 3.5 percent to a seasonally adjusted annual rate of 5.01 million in June from a downwardly revised 5.19 million in May, and are 12.1 percent below the 5.70 million-unit level in June 2006.  The median existing single-family home price was $230,300 in June, up 0.1 percent from a year ago.

Existing condominium and co-op sales dropped 6.3 percent to a seasonally adjusted annual rate of 740,000 units in June from 790,000 in May, and are 6.6 percent lower than the 792,000-unit pace a year ago.  The median existing condo price3 was $228,900 in June, up 2.6 percent from June 2006.

Regionally, existing-home sales in the South eased by 1.7 percent to an annual sales rate of 2.26 million in June, and are 11.4 percent below a year ago.  The median price in the South was $190,800, up 0.7 percent from June 2006.

Existing-home sales in the Midwest declined 2.8 percent in June to a level of 1.37 million, and are 8.1 percent below June 2006.  The median price in the Midwest was $171,700, which is 1.5 percent below a year ago.

Existing-home sales in the West dropped 6.8 percent in June to an annual pace of 1.10 million, and are 19.1 percent below a year ago.  The median price in the West was $340,000, down 0.4 percent from June 2006.

Existing-home sales in the Northeast fell 7.3 percent to a level of 1.01 million in June, and are 7.3 percent lower than June 2006.  The median existing-home price in the Northeast was $294,400, up 1.8 percent from a year ago.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

May Existing- Home Sales Show Market is Under Performing

WASHINGTON, June 25, 2007

Existing-home sales were essentially unchanged in May, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – eased by 0.3 percent to a seasonally adjusted annual rate1 of 5.99 million units in May from an upwardly revised pace of 6.01 million in April, and are 10.3 percent below the 6.68 million-unit level in May 2006.

Lawrence Yun, NAR senior economist, said the market softness is understandable.  "I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers," he said.  "Household formation has slowed dramatically since late 2006, implying that many people are doubling-up – they’re adding roommates or moving in with parents.

"The market is underperforming when you consider positive fundamentals such as the strength in job creation, economic growth, favorable mortgage interest rates and flat home prices.  It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market."

The national median existing-home price2 for all housing types was $223,700 in May, which is 2.1 percent below May 2006 when the median was $228,500.  The median is a typical market price where half of the homes sold for more and half sold for less, but there is a temporary downward distortion in the current national comparison because sales have shifted away from many high-cost markets in the past year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.26 percent in May, up from 6.18 percent in April; the rate was 6.60 percent in May 2006.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said higher inventories are helping to offset an affordability impact from higher mortgage interest rates.  "Although mortgage interest rates are trending up, they are historically favorable," she said.  "The good news is buyers have more negotiating power with a fairly large supply of homes available in much of the country.  Buyers who’ve been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won’t be as good as they are now."

Total housing inventory rose 5.0 percent at the end of May to 4.43 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.4-month supply in April.

Single-family home sales slipped 0.8 percent to a seasonally adjusted annual rate of 5.20 million in May from an upwardly revised 5.24 million in April, and are 10.8 percent lower than a 5.83 million-unit pace a year ago.  The median existing single-family home price was $223,000 in May, which is 2.4 percent lower than May 2006.

Existing condominium and co-op sales rose 2.6 percent to a seasonally adjusted annual rate of 790,000 units in May from 770,000 in April, but are 6.7 percent below the 847,000-unit level in May 2006.  The median existing condo price3 was $228,200 in May, down 0.4 percent from a year ago.

Regionally, existing-home sales in the Northeast rose 5.8 percent to a level of 1.10 million in May, but are 3.5 percent lower than May 2006.  The median existing-home price in the Northeast was $282,700, which is 0.5 percent higher than a year ago.

Existing-home sales in the Midwest rose 0.7 percent in May to a level of 1.41 million, but are 6.6 percent below a year ago.  The median price in the Midwest was $168,800, which is 1.7 percent below May 2006.

Existing-home sales in the West slipped 0.8 percent in May to an annual pace of 1.18 million, and are 16.3 percent below May 2006.  The median price in the West was $341,900, which is 0.5 percent lower than a year ago.

Existing-home sales in the South fell 3.4 percent to an annual sales rate of 2.30 million in May, and are 11.9 percent below a year ago.  The median price in the South was $184,000, down 3.8 percent from May 2006.

Existing-home sales for June will be released July 25. The next Pending Home Sales Index will be on July 3 and the forecast will be revised July 11.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Existing-Home Sales Rise Again in February

WASHINGTON, March 23, 2007

Existing-home sales rose strongly in February following a healthy gain in January, reaching the highest level since last April, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.9 percent to a seasonally adjusted annual rate¹ of 6.69 million units in February from an downwardly revised level of 6.44 million in January, but are 3.6 percent below the 6.94 million-unit pace in February 2006.  Last month's increase was the biggest monthly rise in three years – sales also rose 3.9 percent in March 2004.

David Lereah, NAR's chief economist, said the strong gain is a bit of a surprise.  "Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers," he said.  "Even so, winter storms last month discouraged shopping, and buyers were chilled with the third coldest February on record.  These unusual weather patterns mean home sales that close in March may decline before rebounding later this spring."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.16 percent in the last week, down from an average of 6.29 percent in February.  The 30-year fixed was 6.22 percent in January, and 6.25 percent in February 2006.

The national median existing-home price² for all housing types was $212,800 in February, down 1.3 percent from February 2006 when the median was $215,700.  The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said the median home price currently is distorted.  "Over the last year, we've seen declining sales in many high-cost areas but rising activity in lower cost markets," she said.  "This change in the geographic composition of sales means we aren't getting apples-to-apples comparisons in median home prices from a year ago."

Other indices examining sales of the same properties over time, such as the OFHEO House Price Index, have been showing price gains; however, the OFHEO index is limited to conventional financing.

"What's really happening is probably somewhere in between the different measures, but home prices are soft – a year ago we were still seeing bidding pressures and double-digit price growth," Combs said.  "Overall, home prices should rise slowly this year, and many buyers have an opportunity now that was only a dream during the five-year boom."

Total housing inventory levels rose 5.9 percent at the end of February to 3.75 million existing homes available for sale, which represents a 6.7-month supply at the current sales pace compared with a 6.6-month supply in January.  Raw inventories peaked last July at 3.86 million, and supplies topped at 7.4 months in October.

Single-family home sales increased 3.7 percent to a seasonally adjusted annual rate of 5.88 million in February from 5.67 million in January, but are 3.4 percent below the 6.09 million-unit pace in February 2006.  The median existing single-family home price was $211,100 in February, down 1.5 percent from a year ago.

Existing condominium and co-op sales jumped 5.3 percent to a seasonally adjusted annual rate of 810,000 units in February from a level of 769,000 in January, but are 5.2 percent below the 854,000-unit pace in February 2006.  The median existing condo price³ was $225,400 in February, up 0.5 percent from a year earlier.

Regionally, existing-home sales in the Northeast surged 14.2 percent to a level of 1.21 million in February, and are 3.4 percent higher than February 2006.  The median existing-home price in the Northeast was $265,900, down 1.4 percent from a year earlier.

In the Midwest, existing-home sales rose 3.9 percent in February to a level of 1.58 million, but are 1.9 percent below a year ago.  The median price in the Midwest was $157,000, down 1.3 percent from February 2006.

Existing-home sales in the South increased 1.6 percent to an annual sales rate of 2.58 million in February, but are 4.4 percent below February 2006.  The median price in the South was $175,900, down 2.9 percent from a year ago.

Existing-home sales in the West were unchanged in February, holding at an annual pace of 1.32 million, and are 9.6 percent lower than a year ago.  The median price in the West was $337,100, up 2.2 percent from February 2006.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

###

¹   The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months.  Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity.  For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.  However, seasonal factors cannot compensate for abnormal weather patterns.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings.  This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit.  Because of these differences, it is not uncommon for each series to move in different directions in the same month.  In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

²   The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns.  Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.  Changes in the geographic composition of sales can distort median price data.

³   Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price.  In a given market area, condos typically cost less than single-family homes.

Existing-home sales for March will be released April 24.  The next Pending Home Sales Index will be on April 3 and the forecast will be revised April 11.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Existing-Home Sales Improve in January

WASHINGTON, February 27, 2007

Sales of existing homes rose in January, reaching the highest level in seven months, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.0 percent to a seasonally adjusted annual rate of 6.46 million units in January from an upwardly revised pace of 6.27 million in December.  Sales were 4.3 percent below the 6.75 million-unit level in January 2006.

David Lereah, NAR's chief economist, said observers shouldn't overreact to the sales gain, or to other short-term effects.  "Although we're expecting existing-home sales to gradually rise this year, and buyers are responding to the price correction, some unusually warm weather helped boost sales in January," he said.  "On the flip side, the winter storms that disrupted so much of the country in February could negatively impact the housing market.

"Although the data is seasonally adjusted, these weather events are unusually large – many transaction closings were postponed in February, and home shopping was essentially shut down for about a week in many areas," he said.  "We shouldn't be surprised to see a near-term sales dip, but that will be followed by a continuing recovery in home sales."

Total housing inventory levels rose 2.9 percent at the end of January to 3.55 million existing homes available for sale, which represents a 6.6-month supply at the current sales pace – unchanged from the revised December level.  Supplies peaked at 7.4 months in October.  "Inventories are looking better, but price softness should continue until spring when the market is expected to become more balanced," Lereah said.

The national median existing-home price2 for all housing types was $210,600 in January, down 3.1 percent from January 2006 when the median was $217,400.  The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said a broader view shows the housing market stabilizing.  "The market is trending up from its low last fall, and that is important in restoring confidence to buyers who've been on the sidelines," said Combs.  "Since buyers can find more favorable terms, and they are looking for a place to call home for some years to come, getting into the market now make sense because it's a choice many didn't have during the boom period of bidding wars in much of the country."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.22 percent in January, up from 6.14 percent in December; the rate was 6.15 percent in January 2006.

Single-family home sales rose 3.5 percent to a seasonally adjusted annual rate of 5.69 million in January from an upwardly revised 5.50 million in December, but were 4.2 percent below the 5.94 million-unit level in January 2006.  The median existing single-family home price was $209,200 in January, down 3.5 percent from a year earlier.

Existing condominium and cooperative housing sales slipped 0.1 percent to a seasonally adjusted annual rate of 767,000 units in January from a downwardly revised pace of 768,000 in December.  Last month's sales activity was 5.7 percent below the 813,000-unit pace in January 2006.  The median existing condo price3 was $222,200 in January, up 0.5 percent from a year ago.

Regionally, existing-home sales in the West rose 5.6 percent to an annual pace of 1.32 million in January but were 9.6 percent lower than a year ago.  The median price in the West was $321,300, down 4.6 percent from January 2006.

In the Midwest, existing-home sales increased 4.8 percent in January to a level of 1.53 million, and were 0.6 percent lower than January 2006.  The median price in the Midwest was $162,600, which is 3.5 percent below a year ago.

Existing-home sales in the South rose 2.0 percent to an annual sales rate of 2.54 million in January, but were 7.3 percent below a year ago.  The median price in the South was $174,600, which is 1.7 percent below January 2006.

Existing-home sales in the Northeast were at a level of 1.07 million in January, unchanged from December, and were 5.9 percent higher than January 2006.  The median existing-home price in the Northeast was $260,700, down 1.2 percent from a year earlier.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

November Existing-Home Sales Rise Again

WASHINGTON, December 28, 2006

Existing-home sales continued to recover last month following a rise in October, with the level of sales activity suggesting a turn in the market, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 0.6 percent to a seasonally adjusted annual rate of 6.28 million units in November from a level of 6.24 million in October, but were 10.7 percent below the 7.03 million-unit pace in November 2005.

David Lereah, NAR’s chief economist, said modest gains are expected for home sales.  "As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 – it looks like we may have reached the low point for the current cycle in September,” he said. “We’ve entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down."

Total housing inventory levels fell 1.0 percent at the end of November to 3.82 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.

The national median existing-home price2 for all housing types was $218,000 in November, which is 3.1 percent lower than November 2005 when the median price was $225,000.  The median is a typical market price where half of the homes sold for more and half sold for less.  "For every 1.0 percent drop in home prices, we project an additional 50,000 buyers are drawn into the market," Lereah said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October; the rate was 6.33 percent in November 2005.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said the performance of long-term interest rates is a pleasant surprise.  "Mortgage interest rates are the lowest they’ve been since January, and it’s the first time since August of 2005 that interest rates are lower than a year earlier," said Combs.  "This is increasing buying power at the same time that sellers are showing a willingness to negotiate price and terms.  Combined with a plentiful supply of homes on the market, there’s a window for buyers now with conditions that we haven’t seen prior to the beginning of the housing boom in 2001."

Single-family home sales increased 0.2 percent to a seasonally adjusted annual rate of 5.52 million in November from a pace of 5.51 million in October, but were 10.2 percent lower than the 6.15 million-unit level in November 2005.  The median existing single-family home price was $217,200 in November, which is 3.6 percent lower than a year ago.

Existing condominium and cooperative housing sales rose 3.1 percent to a seasonally adjusted annual rate of 757,000 units in November from a downwardly revised 734,000 in October, but were 13.6 percent below the 876,000-unit pace in November 2005. The median existing condo price3 was $224,600 in November, which is unchanged from a year ago.

Regionally, existing-home sales in the Northeast increased 6.0 percent to a level of 1.06 million in November, but were 4.5 percent below November 2005.  The median existing-home price in the Northeast was $269,000, down 2.2 percent from a year earlier.

Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November but were 17.5 percent lower than a year earlier.  The median price in the West was $351,000, down 0.8 percent from November 2005.

Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, and were 9.6 percent lower than November 2005.  The median price in the Midwest was $165,000, which is 3.5 percent below a year ago.

Existing-home sales in the South fell 1.6 percent to an annual sales rate of 2.47 million in November, and were 10.2 percent below a year ago.  The median price in the South was $179,000, down 3.2 percent from November 2005.

The National Association of Realtors®, "The Voice for Real Estate," is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

1. The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months.  Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity.  For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings.  This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit.  Because of these differences, it is not uncommon for each series to move in different directions in the same month.  In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

2. The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns.  Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

3. Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price.  In a given market area, condos typically cost less than single-family homes.

For more information, contact:
Walter Molony, 202/383-1177, wmolony@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Realtors Assess Resale Value of Remodeling Projects in Shifting Markets

WASHINGTON, December 01, 2006

The resale value of many remodeling projects has not kept pace with the costs of those projects, according to Realtors and remodelers who recently participated in Remodeling magazine’s 2006 “Cost vs. Value Report."  Produced for 19 years by Hanley Wood, LLC, this is the ninth consecutive year the report was completed in cooperation with REALTOR Magazine, as National Association of Realtors members provided their insight into local markets and home buyer preferences in 60 different cities across the country.

Results of the report are summarized in the December 2006 issue of REALTOR Magazine.  The report shows that prices for most remodeling projects continue to increase, though their resale value has decreased.  This trend reflects a return to a more balanced real estate market in many areas of the country.  As in 2005, kitchen and bathroom remodels are still near the top of the list in terms of costs recouped, on a national average.

In 2006, the national average cost for a major kitchen remodel was $54,241, and the return was $43,603, for an 80.4 percent return on investment.  By comparison, in 2005, a major midrange kitchen remodel cost an average of $43,862 and returned $39,920, or 91 percent of the costs to remodel.  Midrange bathroom remodels recouped 85 percent of their cost in 2006, with remodeling expenses averaging $12,918 and resale values averaging $10,970.  Last year, the same project cost $10,499 and returned $10,727, or 102.2 percent.

"Our Realtor members visit hundreds, if not thousands, of homes with their buyer clients each year, and have a unique understanding of what home buyers value in their local markets," said NAR President Pat Vredevoogd Combs of Grand Rapids, Mich., vice president of Coldwell Banker–AJS–Schmidt.  "As real estate markets shift in many sections of the country, homeowners must rely on the guidance of real estate professionals who are immersed in the industry.  Realtors’ insight into buyer preferences and their connections to local remodeling experts help them add value to the real estate transaction, whether their clients are preparing their home for sale or just want to be informed about resale value down the road."

The report compares construction costs with resale values for 25 common remodeling projects in 60 cities.  This year the report provides data for nine U.S. regions, rather than four as in years past, following the divisions established by the U.S.  Census Bureau.  The projects represent additions, remodels and replacements.  Nationally, replacement projects tended to return more value than additions or remodels, but, as in previous reports, the desirability of different remodeling projects varied by region and metropolitan area.

The most profitable projects nationally, from a resale value, were midrange vinyl and upscale fiber cement siding replacements, at an average of 87.2 and 88 percent costs recouped, respectively.  Most of the regions reflected that, as well; some type of siding replacement ranked among the top three projects in terms of costs recouped in every geographic area except the Mountain region, composed of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico and Wyoming.  The least profitable project was a home office remodel; this project returned the lowest percentage of remodeling costs at resale in all but the South West Central (Arkansas, Louisiana, Oklahoma and Texas) and Pacific (Alaska, California, Hawaii, Oregon and Washington) regions.

Homeowners in the Pacific and South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) regions could expect to see some of the highest percentages of remodeling costs returned at resale, while homeowners in the West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) and East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin) experienced some of the lowest returns.

Combs cautioned consumers to look beyond the data.  "Many factors affect a home’s value and, consequently, the resale value of any given remodeling project," she said.  "The home’s overall condition, availability and condition of surrounding properties, location, and regional economic climate are all factors that influence value in real estate.  When considering a remodeling project or preparing a home for sale, consumers should rely on industry professionals, such as Realtors, who have the expertise and experience to help homeowners protect their investment."

To read the full project descriptions, visit www.remodelingmagazine.com.  The site also includes project data for each of the nine regions.  The full study, as well as city-specific reports, which are available for the first time, can be ordered by visiting www.costvsvalue.com.  Members of the media can obtain a sample report by sending an e-mail with press credentials to costvalue-cs@hanleywood.com.  "Cost vs. Value" is a registered trademark of Hanley Wood, LLC.

Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and Web sites, marquee trade shows and events, rich data, and custom marketing solutions.  The company also is North America’s leading provider of home plans.  Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.

The National Association of Realtors, "The Voice for Real Estate," is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

For more information, contact:
Stephanie Singer, 202/383-1050, ssinger@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.

Realtors seek new revenue streams
Neal Gendler
Star Tribune
Published Feb. 17, 2003

As home prices continue to climb and the number of sales set records, the companies with their names on the "for sale" signs may not be making much money each time the word "sold" is added.

Nationally, the typical real estate sale brings the brokerage a profit of $150 -- that's after paying the agent his or her share of the commission and the costs of running the company, according to industry newsletter Real Trends.  Consider: 52,231 homes sold in the Twin Cities last year, at a total value of $11.56 billion.

Such modest profits "are very close to a national average," said Ron Peltier, CEO of Edina Realty and its parent, HomeServices of America, which owns 13 brokerages in 15 states.

Brokers do better in the Twin Cities area, but real estate brokerage remains a low-margin business -- nationally, just 3 to 4 percent.  That's why big companies such as Coldwell Banker Burnet and Edina Realty now operate more-profitable businesses that originate mortgages and sell title insurance.  It's also why brokers in some markets -- including the Twin Cities -- have been charging buyers and sellers up to $250 as a 'transaction commission" or "broker administrative commission."

Twenty years ago, broker net margins were about 12 percent.  So how did real estate brokerages come to make so little?  Answers lie in competition for agents and rising costs, including big outlays for technology.

Competing for top-selling agents has prompted brokerages to increase the share of sales commissions they give agents. Commissions are the broker's biggest expense.  In the Twin Cities area, full-service brokers charge 7 percent of the sale price, though competition for sellers in the past couple of years has caused some to lower their commission to 6 percent.

Traditional companies split commissions four ways.

At 7 percent, 3.85 percent of the commission goes to the broker whose agent listed the house and 3.15 percent goes to the broker whose agent brought the buyer.  (The Twin Cities area is unusual in having two companies with about half the market between them, so it's not uncommon for seller and buyer agents to work for the same brokerage.)  Each broker then splits the commission with the agent whose client sold or bought.

Peltier wouldn't disclose HomeServices margins, and CB Burnet declined to comment for this report, but Peltier said: "Years and years ago -- in the 1970s -- it wasn't unusual that the broker got 55 to 60 percent, on average, of the gross commission."  Then, in the 1980s, a business model called the "100 percent house" reached the Twin Cities.  In that model, agents get all of their company's commission and pay fees for use of the company name, management, office supplies and desk space.

Competition for agents isn't new, and Re/Max isn't the only brand name using the 100 percent model, which its brokers say attracts top agents because they can earn more.

Traditional brokers dispute claims that agents make more money with Re/Max and say that holding onto them isn't cheap.  Commission splits have grown "to the point where many companies pay out up to 90 to 95 percent," Peltier said.  "You can't do that without having some fixed or per-transaction fees that will be charged back to the agent and still stay in business -- and in fact, many companies didn't stay in business."

Charging fees

Brokers began charging their agents fees about 15 years ago, Peltier said, because they couldn't afford them, given the higher payouts to agents.

Although reaction from agents is mixed, "I think agents react very well," said Lynn Mathis, an agent in Edina Realty's Burnsville office and a governor of the Regional Multiple Listing Service.

Still, "there are an awful lot of agents who grumble about it and take their monthly agent-invoicing statement to the office administrator shouting: 'Why are you charging me so much for this?'" she said. "The office administrator usually can mollify most of those agents," pointing out something the agent overlooked.  Some also might grumble about technology fees or a class the company at one time provided free that now carries a fee.

Fees help pay for increasingly expensive ways to compete in reaching and serving clients.  Developing proprietary systems to provide versatile Web sites and supply and maintain information is "a drain on the brokers, and the only way the brokers can rationalize it is to charge a technology fee . . . for the investment the company has made," Peltier said.

Transaction commissions

Big brokers also have been charging buyers and sellers a "transaction commission" or "broker administrative commission."

Peltier said Edina began the charge about five years ago "because of all of the disclosures and the increased demand and load on administrative and processing support."  In theory, commissions are negotiable, "but in fact, it's a flat-fee commission," applied if the sale closes, he said.  It's $195, and "there are a lot of agents who actually mark them up."

Shrinking margins also have encouraged consolidation that has been sweeping the industry for several years.  Burnet Realty and Edina Realty, both among the nation's 10 largest brokerages, changed hands in 1998.  Burnet Realty was bought by New Jersey-based NRT, the nation's largest real estate brokerage.  Edina and Iowa Realty became the base for the Edina-based company now called HomeServices, the nation's second-largest real estate brokerage.

Re/Max is spurring consolidation along by changing the company's business model from just selling franchises to also owning brokerages, said Dave Liniger, co-founder and chairman of Re/Max International, which has 77,000 agents in 4,400 offices in 42 countries.  Re/Max now owns 20 brokerages and plans to buy more, Liniger said.  "We are hoping that by the end of five years, over a third of Re/Max offices will be owned and operated by the company."

He said there's a ready pool of sellers: older brokers who want to cash out and retire.  Other national brokerages, including NRT and HomeServices, also have capitalized on such situations.

National networks

The first national network, Red Carpet, began in California in 1966, and by 1978, there were 174 companies calling themselves national, most of them franchisers, Liniger said.  Now, the national companies have more than 50 percent of the business in the United States, more than half of the sales associates and 25 percent of the offices, he said.

In the past five years, Coldwell Banker and Re/Max nationally have added tens of thousands of agents and continue to grow rapidly. Liniger predicts that in five years, two giant networks will control 60 to 70 percent of the business.

Liniger sees merging as a way to make costs manageable.  When he began Re/Max with three offices in 1973, his technology consisted of an electric typewriter and an answering service.  "Today, when you open a real estate office, the cost of technology is very expensive, but the capacity of the technology is very high," he said.  "An office with a voice-mail system is just as expensive if you are going to have two or 200 people using it."

Buying a Re/Max franchise costs $20,000 to $25,000, he said, but start-up costs are another $200,000 to $400,000.

Whether two networks emerge -- or three, as HomeServices would have it -- bigger brokers are likely to have mortgage title affiliates and even property insurance affiliates, where margins are higher.

"Big brokers make 50 percent of their profit from real estate transactions and 50 percent from ancillary services," Liniger said.

Peltier said brokerages bought by HomeServices that lack mortgage and title affiliates soon add them.  And Liniger said company-acquired Re/Maxes also will suit.

-- Neal Gendler is at ngendler@startribune.com

Copyright 2003 Star Tribune. Republished here with the permission of the Star Tribune.  No further republication or redistribution is permitted without the express approval of the Star Tribune.