Sales of existing homes in August were on track at a seasonally adjusted annualized rate (SAAR) of 5.05 million homes, down 1.8 percent from July 2014 and off 5.3 percent from August 2013 according to the National Association of Realtors® (NAR). Median home prices rose 4.82 percent to $219,800 in August 2014 versus a year ago.
A reduction in distressed properties resulted in fewer investor purchases and hence reduced sales numbers. In essence, good news pertaining to a market recovery in clearing out much of the mass of dwellings in default resulted in fewer of sales.
The following graphs show the monthly SAAR of sales comparing 2013 and 2014, plus the median price over the same period.
Market details in the NAR release include:
- Distressed sales made up just one out of every 12 transactions (8 percent), off from one-out-of every eight sales (12 percent) a year ago. Within the distressed 8 percent total, only 2 percent were short sales and 6 percent foreclosures. The average foreclosure sold for 14 percent less than non-distressed properties and short sales were bought at a 10 percent reduction.
- Individual investors acquired just 12 percent of the home sales in August, down year-over-year from 17 percent and off sequentially 16 percent from July 2014. Two out of every three investors paid all-cash (64 percent).
- All-cash transactions fell precipitously to just 23 percent of all transactions – the lowest level recorded since the 22 percent point seen in December 2009. Year-to-date, an average 31 percent of all residential transactions were all-cash, with the historic range a decade ago in the 12 to 14 percent level.
- First-time buyers are still scarce, remaining at 29 percent of all transactions for the second month in a row. Fifteen years ago, entry-level buyers made up 40 percent of all sales – then considered the norm.
- The typical property closed on in August had been on the market 53 days versus 48 days a year ago. Four-out-of 10 sales were on the market less than one month. Short sales took 135 days and foreclosures 53 days.
- At the current pace of sales, there is an estimated 5.5 months of inventory of existing homes available for sale, with six months considered a norm.
To read the full NAR press release click http://www.realtor.org/news-releases/2014/09/existing-home-sales-slightly-lose-momentum-in-august-as-investor-activity-declines
Let me reiterate that the reduction in the number of sales is not necessarily bad news — unless you were an investor looking to acquire some properties at bargain prices for rental purposes.
Absent from this market, however, were first-time buyers. That is reflected in a declining sales rate year-over-year in homes priced from $100,000 and less, off 15.9 percent. $1 million and up homes, however, increased sales by 2.7 percent in the same period. No doubt student loan debt, a slower recovery in jobs amongst Millennials and more stringent (though improving) loan qualifying requirements all are forming a bottleneck on the first-time homebuyer demographic.
Perhaps the best line for August home sales is When Bad is Good News as we head towards the foothill remains of the former mountain of non-performing properties.
Ted