Let’s end 2013 by looking at a bunch of positive news for real estate and housing…
Glad to see several positive reports about real estate to end 2013. We can only hope that this trend will continue in 2014.
NAR Reports Pending Home Sales Increase
Normally we see home sales slow down in the fall and through the holidays. But on Monday, NAR reported that Pending Home Sales for November 2013 had increased slightly from the previous month. the bad news is that Pending Home Sales are down 1.6% from the level back in November 2012.
As always, I must point out this is talking about homes being under contract and NOT actual closings. Still this is positive news and Lawrence Yun, NAR chief economist, said 2013 will have the best sales numbers in 7 years.
While this is good news, we must accept that current market conditions are as good as they could be. Rising mortgage rates, tight lending standards and increasing price could discourage some buyers. Also, the tight inventory of homes has kept some buyers on the sidelines.
As we head into 2014, I hope we will see improvements in the unemployment numbers and consumer confidence since this will help housing & the economy to recover.
NAR Existing Home Sales
Since I am starting to ramp the blog posting back up, I must go back in time just a bit to touch upon the latest Existing Home Sales report from NAR. This report does talk about homes that have actually closed. Sadly, the Existing Home Sales numbers for November 2013 were 4.3% lower than October 2013. Also, existing home sales for November 2013 were 1.20% lower than November 2012. This is the first time in 29 months that existing home sales were lower year-over-year.
Lawrence Yun, chief economist for NAR, described the slow-down in sales as a “clear loss of momentum.” However, Mr. Yun said that prices for existing homes are increasing at their highest rate in eight years. The US median home price (existing homes) rose 9.40% YOY.
New Home Sales
We got more good news for real estate and housing came from the Census Bureau and HUD report on new home sales. 464,000 new homes were sold in November which is an increase of 16.60% from the 398,000 new homes sold in November 2012. However, the numbers for November 2013 were 2.10% lower than the October 2013 level.
While home builder confidence is up and recent labor reports indicate improving job markets, the Fed’s decision to taper its quantitative easing program in January is generating some uncertainty as mortgage rates will likely rise as the Fed winds down the QE program.
Case Shiller Reports Increasing Home Prices
Case-Shiller just reported that both of their 10-city and 20-city composite home price indices increased 13.6% YOY. This is the 17th consecutive month of annual increases. Check out the chart below showing US home prices (Not Seasonally Adjusted):
Will this trend continue in 2014? Probably not and whether or not home prices continue to increase depends on many factors. David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said:
The key economic question facing housing is the Fed’s future course to scale back quantitative easing and how this will affect mortgage rates. Other housing data paint a mixed picture suggesting that we may be close to the peak gains in prices. However, other economic data point to somewhat faster growth in the new year. Most forecasts for home prices point to single digit growth in 2014.
LPS Reports Home Prices Up
Yesterday, LPS released their report on US home prices for October 2013. They said that home prices increased 0.1% from the previous month but are up 8.8% YOY. It certainly does appear we are ending 2013 with a bang!
CoreLogic Reports Home Prices Up 12% YOY
Last but not least, is the latest report from CoreLogic. They are reporting that US home prices for October 2013 are up 12% YOY.
The Take Away
I must point out these numbers are all about the entire US and will not give buyers or sellers the information they need to make informed decisions. And I must caution consumers about relying upon websites that automate home values such as Zillow. While there is no doubt these websites are fun or interesting, they are not the best choice for finding out the value of a home.
That requires looking at more reliable information and using local market experience and knowledge to determine a home’s true market value.