Existing-Home Sales Fall Again

Existing-home sales were down again, according to the latest report from the National Association of Realtors (NAR).

This is part of the "uneven recovery" that NAR chief economist Lawrence Yun reports. "Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers." Tight credit has hit both sides of the real estate market, affecting both buyers and builders.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge – buyers should check their personal credit, and mortgage availability in their area,” he said.

“Realtors are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location,” Phipps said.

There's other good news on the horizon, as well. The economy is recovering, albeit slowly.

Changing industry climate has brought about numerous changes this month and season. According to the NAR, first-time buyers now make up 34 percent of homes sold. This is up from January's rate of 29 percent. Just a year ago this rate was 42 percent, but was then fueled by the first-time buyer tax credit.

All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. There is a "record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

And how much are people spending these days? The national median existing-home price for all housing types was $156,100 in February, down 5.2 percent from February 2010.

Distressed homes still accounted for a large percentage of total sales. Total distressed sales were 39 percent of the market.

And finally, total housing inventory at the end of February rose 3.5 percent and is now a 8.6-month supply.