Dennis' Mortgage Blog

In its monthly report of sales of existing homes (or previously occupied homes as opposed to newly constructed homes) the National Association of Realtors reported sales in May fell 3.8% below sales in April 2011.  This is the second month in a row that sales of existing homes have declined.  Following an uptick in sales in March to an annual pace of 5.1 million homes, May's sales came in at an adjusted rate of 4.81 million homes, or 5.7% below the pace in March.

Since the data reflects purchase transactions mostly initiated in April, NAR's chief economist Lawrence Yun said some of the May decline was due to poor weather in April and spiking gasoline prices.  In the NAR report Yun also said, "The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”

Last year you may recall home sales declined rapidly after May and the expiration of the home buyers tax credit.  May 2011 sales were 15.3% below last May's pace of 5.68 million sales as buyers rushed to get into escrow on homes so they could qualify for up to $8500 from the government in tax credits.

In May distressed sales (foreclosures, short sales) were 31% of the market, down from 37% in April and level with the number of distressed sales in May 2010.  First time buyers were 35% of the market in May and all cash transactions were 30% of the sales recorded.

In the West existing home sales were stable in May from April at an annual pace of 1.17 million homes with an average price of $192,300---12.6% below the West's median price in May 2010.

I appreciate Yun's optimism for the second half of the year, but other than gasoline prices expected to be lower in the second half I am not sure what else will change that will bring buyers to market for home purchases.  As we have seen in the past few years the single factor that has caused home sales to increase is not historically low mortgage rates, is not lower home prices but rather incentives of several thousand dollars in cash from the government.

If I am selling a home or listing a home I keep this in mind--buyers are attracted to cash savings.  Market your home with seller concessions to save borrowers cash at closing or greatly reduced rates and you will be ahead of your competition in the market which currently has an inventory of 3.72 million existing homes, or a 9.3 month supply at the current sales pace.

Mortgage rates continue to remain low for the time being.  Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance.  Direct dial 562-472-1118